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Tuesday, Mizuho maintained an Outperform rating on Corning (NYSE:GLW) shares and raised the stock's price target to $51 from $47. This adjustment comes as the company confirmed its third-quarter guidance, projecting $3.7 billion in core sales and a midpoint earnings per share (EPS) of $0.53.
The firm's decision to increase the price target reflects a positive view of Corning's consistent performance, particularly in its Display segment. Furthermore, the potential for growth in the Optical segment has been identified, which adds to the confidence in the company’s financial prospects.
Mizuho's analysis suggests that Corning is capable of delivering stable earnings, which supports the new price target. The target of $51 implies a next twelve months (NTM) enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of approximately 14.0 times. This is slightly lower than the company’s current currency-adjusted multiple of roughly 14.8 times.
The firm's commentary highlights the upside optionality that Corning possesses, which has led to the increased price target. The analysis by Mizuho suggests that Corning's stock has room to grow, based on the company's financial guidance and the potential in key business segments.
In summary, Corning's reaffirmed financial outlook for the upcoming quarter and the potential for increased profitability in its Optical segment have contributed to Mizuho's raised price target. The new target suggests that the company is undervalued at its current trading multiple, indicating a positive outlook for Corning's shares.
In other recent news, Corning Incorporated (NYSE:GLW) has been the subject of several analyst upgrades and target price increases due to its strong growth prospects. BofA Securities, Susquehanna, Oppenheimer, and Citi have all raised their price targets for Corning, with BofA Securities and Susquehanna setting theirs at $51 and $55 respectively. These adjustments follow their visits to Corning's advanced fiber manufacturing facility in North Carolina and the company's announcement of its strategic "Springboard" plan.
The Springboard plan outlines Corning's growth opportunities and margin targets, aiming for a 20% operating margin by 2026. Corning has also decided to implement price increases within its Display Technologies segment in response to currency market fluctuations. This strategy is expected to secure a segment net income between $900 million and $950 million in 2025, maintaining a stable net income margin of 25%.
Corning's Optical Communications segment is projected to experience significant growth, with enterprise sales forecasted to surge by more than 40% year-over-year in Q3 2024. The company reaffirmed its core sales growth guidance at $3.7 billion and an EPS guidance ranging from $0.50 to $0.54 for the same quarter.
Analysts from various firms, such as Susquehanna and Mizuho Securities, have expressed a positive outlook for Corning's financial trajectory and market performance. They attribute this optimism to Corning's robust financial performance and significant earnings and revenue growth, particularly in the optical connectivity products sector.
InvestingPro Insights
With Mizuho's positive outlook on Corning's financial performance, it's worth noting the company's strong track record in rewarding shareholders. According to InvestingPro Tips, Corning has raised its dividend for 13 consecutive years, showcasing its commitment to consistent shareholder returns. Additionally, analysts anticipate net income growth for Corning this year, which aligns with Mizuho's optimistic analysis of the company's profitability.
From a valuation perspective, Corning's market capitalization stands at $38.21 billion, reflecting its significant presence in the industry. Despite a high P/E ratio of 86.86, which suggests a premium valuation, the adjusted P/E ratio for the last twelve months as of Q2 2024 is lower at 44.91, indicating a more reasonable valuation when considering the company's earnings. Moreover, Corning has maintained a steady dividend yield of 2.51%, which could be appealing to income-focused investors.
For investors seeking more information, there are additional InvestingPro Tips available, providing detailed insights into Corning's financials and market position. These tips can help investors make more informed decisions by considering Corning's industry standing, valuation multiples, and profitability forecasts.
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