GLW - Corning slips as JP Morgan cuts on 'tepid recovery' fears into earnings

2023-10-09 16:49:57 ET

Corning ( NYSE: GLW ) shares fell nearly 2% in extended-hours trading on Monday after investment firm J.P. Morgan downgraded it on fears of a "tepid recovery" into earnings.

Analyst Samik Chatterjee lowered the firm's rating on Corning ( GLW ) shares to neutral from overweight, noting that the chance for earnings upside over the near to medium-term is "more muted than anticipated" as the recovery looks to be taking a longer period of time than initially anticipated.

"The direct consequence of a milder recovery is considerable downside to current consensus estimates that embed sequential earnings growth in 4Q23E, as well as downside to consensus expectations of +25% y/y EPS growth in 2024E," Chatterjee, who also cut the price target to $36 from $43, wrote in an investor note.

Chatterjee added that the expectation for 2024 is 17% year-over-year earnings growth, aided by pricing improvements, layoffs, improved productivity and inventory reductions, but any significant improvement in revenue is likely dependent upon the end markets, including display, optical and smartphones.

"Importantly, this is in the backdrop of investors who are now increasingly focusing their attention on Corning's 'new' long-term revenue growth rate, following almost four years of various macro headwinds, which appears to be now tracking closer to mid-single digits relative to the prior long-term growth outlook of +6%-8%," Chatterjee added.

Analysts are largely bullish on Corning ( GLW ). It has a BUY rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates GLW a HOLD .

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