Technology
Why Analysts Are Chasing Corning Higher After Earnings
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Corning Inc. (NYSE: GLW) posted strong results for the fourth-quarter before markets opened on Tuesday and analysts were fairly impressed. In fact practically all of the analysts that follow Corning hiked their price targets in response to the earnings report.
24/7 Wall St. has included some brief highlights from the earnings report as well as what a few analysts are saying after the fact.
The company posted $0.50 in earnings per share (EPS) and $2.48 billion in revenue, versus the consensus estimates of $0.44 in EPS and $2.55 billion in revenue. The same period from last year had $0.34 in EPS and $2.23 billion in revenue.
Jefferies has a Hold rating for Corning but raised its price target to $24.50 from $21. The firm detailed in its report:
Corning posted better-than-expected Q4 results. At current valuations, we continue to believe that the risk/reward in the shares is balanced. Optionality associated with auto glass, pharma glass, and GPFs should take longer to materialize in the company’s financials.
Merrill Lynch’s Wamsi Mohan raised Corning to a Neutral rating from Underperform and raised the price objective to $28 from $20.50. Mohan’s view shows that the positives include stable LCD glass pricing, a strong capital return program, and optionality in Gorilla Glass (mobile and auto). Negatives in the Corning story include a 2018 reset of Yen core rate, continued deterioration of Display topline, and the valuation at the higher end of its range.
Mohan further commented in his report:
Our Neutral rating on Corning is based on glass supply and demand being in balance. We expect glass pricing to remain stable. Corning has a strong capital return program. Increased adoption from Gorilla Glass in other end markets (automobiles) could be catalyst for Corning in the longer-term. These positives are offset by the 2018 reset of Yen core rate which likely lowers consensus EPS, continued deterioration of topline in LCD glass business, and valuation at higher end of historical range.
Standard & Poor’s has a Hold rating on Corning but raised the price target to $25 from $22. S&P said:
We raise our 12-month target by $3 to $25, 14.7-times our 2017 EPS estimate. This multiple is a slight premium to peers, reflecting our improving sales growth outlook and Corning’s strong market position. We trim our 2017 EPS estimate by $0.02 to $1.70 and set 2018’s at $1.74. Corning reported Q4 operating EPS of $0.50 vs $0.34, $0.06 above the Capital IQ consensus. Q4 net sales increased 11%, on 13% growth in Display Technologies and 11% growth Optical Communications. We see 4.9% sales growth in ’17 as GLW continues to benefit from fiber buildouts and adoption of new Gorilla Glass products.
A few analysts weighed in as well:
- Barclays has an Overweight rating and raised its price target to $28 from $26.
- Deutsche Bank raised the price target to $30 from $28.
- Goldman Sachs has a Buy rating and raised its price target to $29 from $27.
- JP Morgan raised its price target to $25 from $23.
- UBS raised the price target to $26 from $23.50.
Shares of Corning were last trading up 2% at $26.69, with a consensus analyst price target of $25.09 and a 52-week trading range of $17.52 to $26.99.
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