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How LG Display's 'Unique' Position Makes It A Buy

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  • LG Display Co Ltd. (ADR) (NYSE: LPL) shares have declined steadily so far in 2015 and are down 29 percent year-to-date.
  • Cowen’s Robert W. Stone initiated coverage of the company with an Outperform rating and a price target of $13.50.
  • LG Display is poised to enjoy a premium position in the 4K UHD upgrades, Stone stated.

Analyst Robert Stone mentioned that the HIS projected revenue from total flat panel display, or FPD, to record a moderate 3.5 percent CAGR during 2015-19. While the growth of TVs, PCs and smartphones is dependents mostly on replacement cycles, newer technologies are expected to grow at a fast pace.

“[W]e estimate 4K/UHD should account for ~40% of total TV units by 2018E, vs. ~10%,” Stone wrote.

LG Display, a leading player in the displays segment, holding around 28 percent of the global market share, is expected to enjoy a premium position in 4K/UHD upgrades, as it is the only supplier of OLED TV panels.

The company is also expected to emerge as a key player in the flexible AMOLEDs, since they displace LCDs in mobile, automotive and wearables, Stone mentioned.

LG Display’s current stock valuation reflects the near-term concerns over LCD TV supply and demand, Stone said. He added that the company’s gross margins are expected to bottom at 14 percent in 1Q16 due to a weaker TV market and less seasonal strength in mobile.

“We project further GM and OM improvement in 2017-18E, with OM reaching 6.3 and 6.6%, respectively, as OLED TV turns profitable and flexible OLED ramps,” the Cowen report stated.

Latest Ratings for LPL

DateFirmActionFromTo
Jul 2016Bank of AmericaUpgradesNeutralBuy
Jun 2016NomuraUpgradesReduceNeutral
Jun 2016BarclaysInitiates Coverage onOverweight

View More Analyst Ratings for LPL
View the Latest Analyst Ratings

Posted-In: Cowen Robert W. Stone VetrAnalyst Color Initiation Analyst Ratings

 

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