BOSTON (AP) — Shares of Universal Display Corp. dropped Monday after a Piper Jaffray analyst cut his earnings estimates, saying the supplier of materials used in smartphone displays faces new challenges in its relationship with Samsung.

THE SPARK: Piper Jaffray's Jagadish Iyer kept his "Underweight" rating on Universal Display and cut his 2013 estimates for revenue from sales of materials and from licensing. He also cut his price target for the stock to $16 from $18.

THE BIG PICTURE: The Ewing, N.J., company makes ingredients for displays that use organic light-emitting diodes, or OLEDs. Its key customer is Samsung Electronics Co.

THE ANALYSIS: South Korea-based Samsung is preparing to launch its next-generation Galaxy 4S. Iyer said in a note to clients that his discussions with industry experts lead him to believe that the new phone will use OLED materials supplied by Universal Display with materials from another vendor as well. He expects that vendor will be Nippon Steel Chemical.

Iyer also thinks that Samsung will manage its consumption of red and green-emitting OLED materials more efficiently, limiting its need for materials from Universal Display.

The analyst cut his 2013 estimate for Universal Display's materials sales revenue to $67 million from $77 million.

SHARE ACTION: Shares of Universal Display fell $4.21, or 12.9 percent, to close at $28.56. The shares hit a 52-week low of $21.55 on Nov. 8. The stock has fallen by about 36 percent over the last 12 months.