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On Friday, Citi reiterated its Buy rating on Corning (NYSE:GLW) stock with a new price target of $51, up from the previous target, in light of the company's pre-announcement which highlighted stronger-than-expected demand in the optical connectivity sector.
The firm's optimism is based on the anticipated benefits of Corning's Springboard framework, which is expected to significantly boost annualized sales by the fourth quarter of 2026.
Corning's recent pre-announcement has led to increased confidence in the company's revenue and profit potential within the Springboard framework, which aims to add over $3 billion to annualized sales by the fourth quarter of 2026 compared to fourth quarter 2023 levels.
Sales could potentially exceed $5 billion by the same period. This growth is supported by moderated spending, which is expected to underpin profitability improvements.
The analyst from Citi highlighted the company's recovery potential in various markets, including display technology, smartphones, PCs, and carrier spending supported by Broadband Equity, Access, and Deployment (BEAD) initiatives.
Additionally, the secular demand for optical connectivity is set to rise as enterprises and hyperscalers expand fiber usage, which is estimated to be tenfold higher in AI networks compared to non-AI networks. The growing inclusion of fiber content in automobiles also contributes to the positive outlook.
Corning's financial performance and the impact of these developments will be further illuminated when the company reports its results on July 30. The firm's analysis indicates a robust cyclical recovery across Corning's diverse product lines, reinforcing the Buy rating.
In other recent news, Corning Incorporated (NYSE:GLW) has seen several noteworthy developments. The company recently revised its second-quarter 2024 guidance upwards, anticipating core revenue of $3.6 billion, surpassing the initial estimate of $3.4 billion. Additionally, the core earnings per share are expected to be at the upper end or slightly exceed the previously provided range of $0.42 to $0.46 per diluted share.
Corning also unveiled its "Springboard" program, aiming to boost annualized revenue by $3 billion over the next three years. Various analysts have adjusted their price targets for Corning, with Argus raising it to $50, Mizuho Securities to $43, Deutsche Bank to $39, Citi to $45, and BofA Securities to $42. However, Morgan Stanley downgraded Corning's stock from Overweight to Equalweight, while JPMorgan upgraded it from Neutral to Overweight.
These developments follow the company's recent investor event and R&D tour, which highlighted the company's strategic initiatives and potential for growth in the Optical segment, driven by carrier spending and increased spending in artificial intelligence. These are all part of the company's recent efforts to navigate market conditions and currency fluctuations effectively.
InvestingPro Insights
As Corning (NYSE:GLW) garners a favorable outlook from Citi, real-time data from InvestingPro provides additional context to the company's financial stature. Corning's market capitalization stands robust at $39.04 billion, reflecting its significant presence in the industry. Despite a challenging market, Corning's commitment to shareholder returns is evident, with a dividend yield of 2.49%, and the company has impressively raised its dividend for 13 consecutive years—showcasing its financial resilience and dedication to investors.
InvestingPro Tips highlight that Corning's net income is expected to grow this year, with 8 analysts having revised their earnings upwards for the upcoming period, signaling potential optimism in the company's profitability. Additionally, the company's strong performance is reflected in a remarkable 1-month price total return of 18.49%, underscoring the recent positive momentum in Corning's stock price. For investors seeking deeper insights and additional InvestingPro Tips, there are 14 more tips available, which can be accessed with a subscription. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing valuable guidance for informed investment decisions.
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