UPDATE: Goldman Sachs Raises Corning (GLW) to 'Buy' as Cyclical Bottom Seen as Catalyst

(Updated - April 12, 2016 10:50 AM EDT)

Goldman Sachs upgraded Corning (NYSE: GLW) from Neutral to Buy with a price target of $26.00 (from $19.00), implying upside of 26%. Analyst Doug Clark said the glass/TV industry is near a cyclical bottom, and he thinks now is the time to buy shares.

"We believe the TV supply chain is approaching a cyclical bottom, which is historically a leading indicator of stock performance and therefore a time to own the stock," said Clark.

"In addition to a potential upturn in the LCD cycle, we see a combination of earnings diversification, stable glass price declines, recent FX moves, M&A, and stable shareholder returns as supportive of higher valuation and multiple expansion," added the analsyt.

Discussing catalysts, Clark said, "We view panel maker operating margins as a good proxy for the LCD cycle, which are expected to bottom in 1Q16. Furthermore, our supply/demand glass model and analysis suggests that glass de-stocking should inflect in the coming quarters, driving a return to yoy revenue and EPS growth. Early indicators of a turn in the cycle include below-average supply chain inventory levels and stabilizing panel prices. The 10% YTD yen appreciation could allow for more favorable FX hedges. We see several potential catalysts on the horizon: 1) further M&A ($1-3bn during 2016-19 per GLW), 2) 1H completion of announced sale of its stake in Dow Corning JV (unlocking ~$4bn in incremental capital), and 3) adoption of Gorilla Glass for auto, Iris Glass for TVs, and new products in Life Sciences. Finally, we expect further valuation support from a 2.6% dividend yield and a commitment to return >$10bn to shareholders through 2019."

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 $20.62 yesterday.

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