GLW - Corning: Earnings Recovery To Monitor
2024-05-02 06:47:23 ET
Summary
- Corning provided a supportive Q2 outlook, but limited guidance visibility raises concerns.
- Supportive capital allocation priorities and Corning's profitability metrics backed the company's equity story.
- Adjustments to internal estimates result in a lower target price for Corning. Still, we maintain a buy rating status.
Following a stock price underperformance in mid-October 2023, we decided to deep-dive into Corning ( GLW ), emphasizing " Supportive Megatrends Coupled With A Recovery Story ." Our buy rating was supported by 1) a margin leverage potential with price actions in the Display segment and right-sizing staffing, 2) an underappreciated product portfolio backed by ongoing destocking activities, and 3) a solid balance sheet with a tasty yield. Indeed, Corning is one of the longest debt tenors in the S&P 500 index with a current average debt maturity of approximately 23 years, no relevant maturities in the upcoming visible period (Fig 1), and the right capital allocation priorities (progressive DPS, bolt-on acquisitions, and opportunistic buyback). Since our last update, Corning's total return has increased by 20% (including the dividend payment), outperforming the broader market....
Corning: Earnings Recovery To Monitor