Corning, Inc. (GLW) is a leading developer of advanced glass substrates for multiple markets. June quarter earnings beat the Zacks Consensus Estimate by a penny, but guidance was soft, reflecting inventory builds at TV manufacturers, which impacted both the Display and Specialty Materials segments.
We continue to believe in Corning’s longer-term prospects, especially with respect to GG and strong position at OEMs. However, while efforts to diversify operations continue, Corning remains highly dependent on display markets. Price erosion in this market and the higher debt level will remain a drag on earnings.
Given the above, we are downgrading the shares from Neutral to Underperform. We think downside potential is greater, given the extreme dependence on the display market and the possibility of further weakness in earnings.
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