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Corning Spikes as Analyst Predicts 25% Upside

Corning posted “core” sales of $3.33 billion, up 17% from a year earlier.

Victor J. Blue/Bloomberg

The market initially ignored Wednesday’s strong earnings report from specialty glass manufacturer Corning, selling off 5% following the news. But investors rediscovered the stock Thursday, thanks to Oppenheimer analyst Martin Yang, who raised his rating to Outperform from Perform, setting a price target of $45.

Corning (ticker: GLW) posted “core” sales of $3.33 billion, up 17% from a year earlier and 11% from the third quarter, and ahead of the Wall Street analyst consensus at $3.19 billion. Non-GAAP earnings were 52 cents a share, up 13% from a year ago, and above the Street projections of 38 cents a share. The company saw strength in most of its business, including display technologies, optical communications, cellphone screen glass, and environmental technologies.

For the first quarter, Corning projects core sales of between $3 billion and $3.2 billion, up 24% at the midpoint from $2.5 billion a year ago. The company sees non-GAAP profits of 40 to 44 cents a share, up from 20 cents a year ago, and ahead of the Street’s 39 cents.

Yang writes in a research note that his upgrade reflects a combination of a strengthening business outlook and a “compelling” valuation.

“Corning is uniquely positioned to benefit significantly across all of its business segments as the world gradually recovers from the pandemic,” he writes. “The company’s streamlining and optimization efforts in 2020 have prepared it for accelerating earnings growth and free cash flow  generation in the midterm, as its top line resumes more sustainable growth.” He adds that the stock trades right at its five-year median price/earnings ratio. He sees “an attractive opportunity to own the stock longer term.”

Yang adds that he thinks a 25% premium to its historical median valuation is “appropriate and conservative given the company’s strengthening business outlook and [the] overall multiple expansion for U.S. equities in the past 12 months.”

Corning shares as of midday Thursday were up 4%, to $36.65.

Write to Eric J. Savitz at [email protected]

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