UPDATE: Susquehanna Upgrades Corning (GLW) to Positive on TV Trends; Sapphire Seen as Expensive

March 26, 2014 7:06 AM EDT
Get Alerts GLW Hot Sheet
Price: $24.79 +1.52%

Rating Summary:
    14 Buy, 13 Hold, 4 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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(Updated - March 26, 2014 8:27 AM EDT)

Susquehanna upgraded Corning (NYSE: GLW) from Neutral to Positive with a price target of $25.00 (from $15.00). Analyst Mehdi Hosseini thinks the company is in the first inning of a multi-year TV replacement cycle.

"We argue share appreciation the past 6 months has had more to do with accelerated buy backs. And, improving fundamentals should help with more upside from here especially as earning power improves (fueled by a multi-yr TV replacement cycle, margin expansion) while there is incremental confidence on FCF margin of 15-20%. The glass industry could also consolidate given poor balance sheets among competitors, helping with multiple expansion (recall semi memory industry," said Hosseini.

"With Corning taking over the SCP assets (or tanks) in Korea, while moving some of the (gorilla) manufacturing from Japan to Korea, we expect material improvement in the cost and margin profile for Gorilla (cover material) that is included in the Specialty Material business unit. This should help keep the cost difference to at least 10x when comparing to Sapphire, as a prospective replacement for Gorilla. Additionally, we note 45% of Gorilla demand in CY13 was driven by the tablet sub‐segment. Use of Sapphire would be cost prohibitive in the tablet application. With smart phone screen size increasing, while tablets are offering a much higher unit growth rate, we argue Gorilla demand has actually been diversified and helps reduce the downside risk (of being replaced with Sapphire material)," he added.

For an analyst ratings summary and ratings history on Corning click here. For more ratings news on Corning click here.

Shares of Corning closed at $20.06 yesterday.

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