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Corning (GLW) Stock Up 29% in Past Six Months: Reason to Buy?
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Buoyed by a holistic growth model, Corning Incorporated (GLW - Free Report) is currently trading in the vicinity of its last 52-week high. The stock is currently trading at $41.94, close to its 52-week high of $46.39. The stock has gained 29.4% over the past six months compared with the industry’s growth of 28.2%, outperforming peers like Altice USA, Inc. (ATUS - Free Report) but lagging Arista Networks, Inc. (ANET - Free Report) .
Corning is likely to benefit from improved demand and commercialization of its innovations. Its capabilities are becoming increasingly vital to diverse industries. In addition, the restructuring of business operations is expected to be conducive to healthy long-term growth.
Image Source: Zacks Investment Research
Corning’s Key Growth Driver
The fiber optic solutions business is likely to be the key growth driver for Corning, aided by the increasing use of mobile devices that require efficient data transfer and networking systems. Supporting this trend is the proliferation of clouds, resulting in increased storage and even virtual computing. Since both consumers and enterprises are using networks more extensively and the data thus generated is increasingly being used to train AI models, there is tremendous demand for quality networking.
Additionally, data consumption patterns are changing, with a growing propensity to consume video content, creating the need for faster data transfer. Since optical networks are more efficient and most existing networks are copper-based, the demand for optical solutions is particularly strong. Corning offers several products focused on the data center, with a portfolio consisting of optical fiber, hardware, cables and connectors, enabling it to create optical solutions to meet evolving customer needs. The growing adoption of innovative optical connectivity products for generative AI applications is expected to be another essential growth driver in the Optical Communication segment.
Business Restructuring to Unlock Value
Designed to unlock opportunities for valuable synergies, Corning’s operating structure has been reorganized to align executive management and business teams around five Market-Access Platforms (MAPs) — Mobile Consumer Electronics, Optical Communications, Automotive, Life Sciences and Display. Corning has a leadership position in each of these markets, which, along with focused marketing efforts, should drive growth. Additionally, the reorganization increases efficiency because it creates the opportunity to reuse assets and capabilities developed for customers in one market ecosystem to serve customers in another.
Corning Focusing on State-of-the-Art Products
Corning continues to focus on developing state-of-the-art cover materials, which have been deployed on more than 8 billion devices. Samsung recently opted to deploy Corning Gorilla Armor cover material for its latest Galaxy S24 Ultra devices. It is the most scratch-resistant and optically advanced Gorilla Glass yet. The solution brings an enhanced visual experience with unparalleled durability to Samsung’s newest flagship smartphone.
The company recently launched an advanced cellular indoor solution dubbed Everon 5G Enterprise Radio Access Network. The latest addition to Corning’s Everon portfolio efficiently supports multiple mobile operators over a common network. This marks a major shift from legacy solutions that deliver cellular connectivity for only one operator at a time. The solution lowers the cost of ownership by approximately 50% and reduces installation time by up to 75%. Owing to its capability of delivering reliable cellular coverage in high-density environments, it has multiple use cases in hospitals, hotels, airports and beyond.
Corning is also aiming to capitalize on the evolving needs of global automakers. It has collaborated with AUO Corporation to facilitate the development of large-format curved automotive display modules utilizing Corning ColdForm technology. Corning’s solution enables AUO to shape car displays at room temperature, offering a cost and energy-efficient alternative to legacy hot-forming methods, with the potential to establish it as a major player advancing automotive glass solutions.
Limited End-Market Diversification
Despite healthy growth dynamics, end-market diversification is limited within the Display and Optical segments, which account for more than half of total revenues. Since the Display Technologies and Specialty Materials segments are largely dependent on consumer spending, particularly on LCD TVs and mobile PCs, this further narrows down the market. Although Corning is expected to benefit from massive growth in the Communist nation, certain China-based panel makers with whom it has limited relationships are entering the market. Building a significant position in China in the current situation is a big challenge.
Profitability Woes
Corning is facing a steady decline in operating income with high R&D expenditure as it focuses on innovative products. In addition, high technological obsolescence decreases a product’s life span and tends to escalate R&D costs to replace an obsolete product with a technologically superior one.
Image Source: Zacks Investment Research
Estimate Revision Trend
Earnings estimates for Corning for 2024 have moved down 17.7% to $1.91 over the past year, while the same for 2025 has declined 11.9% to $2.29. The negative estimate revision depicts bearish sentiments about the stock.
Image Source: Zacks Investment Research
End Note
By investing steadily in pioneering new technologies, Corning is well-positioned to benefit from secular growth drivers for new optical connectivity products for generative AI applications. Solid demand trends for premium glass for mobile devices and semiconductor-related products and large-format curved automotive display modules are tailwinds. Business restructuring is further expected to generate healthy growth momentum.
However, limited end-market diversification and high-concentration risks are likely to put pressure on the top-line growth. The downtrend in estimate revisions further portrays skepticism about the stock’s growth potential. High R&D costs eroded its profitability to a large extent. With a Zacks Rank #3 (Hold), Corning appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Corning (GLW) Stock Up 29% in Past Six Months: Reason to Buy?
Buoyed by a holistic growth model, Corning Incorporated (GLW - Free Report) is currently trading in the vicinity of its last 52-week high. The stock is currently trading at $41.94, close to its 52-week high of $46.39. The stock has gained 29.4% over the past six months compared with the industry’s growth of 28.2%, outperforming peers like Altice USA, Inc. (ATUS - Free Report) but lagging Arista Networks, Inc. (ANET - Free Report) .
Corning is likely to benefit from improved demand and commercialization of its innovations. Its capabilities are becoming increasingly vital to diverse industries. In addition, the restructuring of business operations is expected to be conducive to healthy long-term growth.
Image Source: Zacks Investment Research
Corning’s Key Growth Driver
The fiber optic solutions business is likely to be the key growth driver for Corning, aided by the increasing use of mobile devices that require efficient data transfer and networking systems. Supporting this trend is the proliferation of clouds, resulting in increased storage and even virtual computing. Since both consumers and enterprises are using networks more extensively and the data thus generated is increasingly being used to train AI models, there is tremendous demand for quality networking.
Additionally, data consumption patterns are changing, with a growing propensity to consume video content, creating the need for faster data transfer. Since optical networks are more efficient and most existing networks are copper-based, the demand for optical solutions is particularly strong. Corning offers several products focused on the data center, with a portfolio consisting of optical fiber, hardware, cables and connectors, enabling it to create optical solutions to meet evolving customer needs. The growing adoption of innovative optical connectivity products for generative AI applications is expected to be another essential growth driver in the Optical Communication segment.
Business Restructuring to Unlock Value
Designed to unlock opportunities for valuable synergies, Corning’s operating structure has been reorganized to align executive management and business teams around five Market-Access Platforms (MAPs) — Mobile Consumer Electronics, Optical Communications, Automotive, Life Sciences and Display. Corning has a leadership position in each of these markets, which, along with focused marketing efforts, should drive growth. Additionally, the reorganization increases efficiency because it creates the opportunity to reuse assets and capabilities developed for customers in one market ecosystem to serve customers in another.
Corning Focusing on State-of-the-Art Products
Corning continues to focus on developing state-of-the-art cover materials, which have been deployed on more than 8 billion devices. Samsung recently opted to deploy Corning Gorilla Armor cover material for its latest Galaxy S24 Ultra devices. It is the most scratch-resistant and optically advanced Gorilla Glass yet. The solution brings an enhanced visual experience with unparalleled durability to Samsung’s newest flagship smartphone.
The company recently launched an advanced cellular indoor solution dubbed Everon 5G Enterprise Radio Access Network. The latest addition to Corning’s Everon portfolio efficiently supports multiple mobile operators over a common network. This marks a major shift from legacy solutions that deliver cellular connectivity for only one operator at a time. The solution lowers the cost of ownership by approximately 50% and reduces installation time by up to 75%. Owing to its capability of delivering reliable cellular coverage in high-density environments, it has multiple use cases in hospitals, hotels, airports and beyond.
Corning is also aiming to capitalize on the evolving needs of global automakers. It has collaborated with AUO Corporation to facilitate the development of large-format curved automotive display modules utilizing Corning ColdForm technology. Corning’s solution enables AUO to shape car displays at room temperature, offering a cost and energy-efficient alternative to legacy hot-forming methods, with the potential to establish it as a major player advancing automotive glass solutions.
Limited End-Market Diversification
Despite healthy growth dynamics, end-market diversification is limited within the Display and Optical segments, which account for more than half of total revenues. Since the Display Technologies and Specialty Materials segments are largely dependent on consumer spending, particularly on LCD TVs and mobile PCs, this further narrows down the market. Although Corning is expected to benefit from massive growth in the Communist nation, certain China-based panel makers with whom it has limited relationships are entering the market. Building a significant position in China in the current situation is a big challenge.
Profitability Woes
Corning is facing a steady decline in operating income with high R&D expenditure as it focuses on innovative products. In addition, high technological obsolescence decreases a product’s life span and tends to escalate R&D costs to replace an obsolete product with a technologically superior one.
Image Source: Zacks Investment Research
Estimate Revision Trend
Earnings estimates for Corning for 2024 have moved down 17.7% to $1.91 over the past year, while the same for 2025 has declined 11.9% to $2.29. The negative estimate revision depicts bearish sentiments about the stock.
Image Source: Zacks Investment Research
End Note
By investing steadily in pioneering new technologies, Corning is well-positioned to benefit from secular growth drivers for new optical connectivity products for generative AI applications. Solid demand trends for premium glass for mobile devices and semiconductor-related products and large-format curved automotive display modules are tailwinds. Business restructuring is further expected to generate healthy growth momentum.
However, limited end-market diversification and high-concentration risks are likely to put pressure on the top-line growth. The downtrend in estimate revisions further portrays skepticism about the stock’s growth potential. High R&D costs eroded its profitability to a large extent. With a Zacks Rank #3 (Hold), Corning appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.