On Wednesday, Corning Incorporated (NYSE:GLW) stock received an upgrade in its rating from Deutsche Bank, moving from Hold to Buy. The new price target set for the company is $46.00, indicating a positive outlook on the stock's future performance.
The upgrade is grounded in the expectation of Corning's significant earnings per share (EPS) growth in the coming years. Deutsche Bank forecasts a compound annual growth rate (CAGR) of 14% from 2024E to 2027E for the company's EPS. This anticipated growth is a primary factor behind the analyst's confidence in the stock.
Currently, Corning's shares are trading at 18 times the estimated EPS for 2025. This valuation aligns with the company's historical average. Moreover, it represents a two-fold discount compared to the S&P index, which is noteworthy considering Corning's re-accelerating revenue growth and projected growth rates that are expected to surpass the market average.
The analyst's commentary highlights these key points, emphasizing the potential for double-digit EPS growth over the next several years. The positive stance is based on the company's trading metrics and growth prospects, which appear to be strong when compared to broader market indices.
In other recent news, Corning Incorporated has showcased impressive financial performance in the second quarter of 2024, largely due to the demand for its new optical connectivity products designed for generative AI.
This led to over 40% year-over-year growth in the enterprise segment of their optical business, resulting in record sales. In addition, Corning secured a strategic agreement with Lumen Technologies, reserving 10% of Corning's global fiber capacity to support Lumen's AI-powered data center network.
As part of their future strategy, Corning introduced the Springboard plan, which is expected to generate over $3 billion in annual sales in the next three years. Despite experiencing a decline in the carrier business, the company anticipates a compound annual growth rate (CAGR) of 25% for the enterprise business in the coming years. Furthermore, Corning projects sales to reach approximately $3.7 billion and earnings per share (EPS) to range between $0.50 to $0.54 in Q3 2024.
However, it's worth noting that while the carrier business has seen sequential growth, it is yet to bounce back from the previous year's downturn. On the other hand, Corning's gross margin improved to 37.9% in Q2, and the company is witnessing a strong adoption of its new optical connectivity products. These recent developments are a testament to Corning's commitment to innovation and strategic growth.
InvestingPro Insights
Following the optimistic outlook provided by Deutsche Bank, Corning Incorporated (NYSE:GLW) shows potential through various financial metrics and analyst revisions. According to InvestingPro data, Corning has a market capitalization of $32.39 billion and trades at a price-to-earnings (P/E) ratio of 83.65, which is adjusted to 42.26 on a last twelve months basis as of Q2 2024. Despite a slight revenue decline of 6.92% over the last twelve months as of Q2 2024, Corning maintains a robust gross profit margin of 33.31%.
InvestingPro Tips suggest that Corning is a high shareholder yield company that has raised its dividend for 13 consecutive years, demonstrating a commitment to returning value to shareholders. Notably, the company has also maintained dividend payments for 18 consecutive years, with a current dividend yield of 2.82%. Analysts have revised their earnings upwards for the upcoming period, indicating confidence in Corning's financial prospects. With a strong return over the last three months of 19.96%, and a year-to-date price total return of 32.65%, Corning's stock performance reflects positive sentiment in the market.
For investors seeking additional insights, there are more InvestingPro Tips available for Corning, including the company's profitability predictions and its standing in the Electronic Equipment, Instruments & Components industry. To explore these insights in further detail, consider visiting https://www.investing.com/pro/GLW and using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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