On Wednesday, Mizuho Securities adjusted its stance on Corning Incorporated (NYSE:GLW) stock, shifting from a Neutral to an Outperform rating and increasing the price target to $47 from $44. The move comes as anticipation builds for the company's September 19 review of its Optical glass fiber business.
Corning, known for its innovations in glass science, has not shown signs of a slowdown in its business and growth programs according to the securities firm.
Optical glass fiber, which represents 34% of Corning's sales and is expected to contribute over half of the company's targeted sales growth through 2027, is a key focus for the company. This segment's growth is particularly significant as it has traditionally replaced copper wire for reasons of distance and bandwidth.
The upgrade also follows a recent decline in Corning's stock price, which Mizuho sees as an opportunity given the company's stable performance. The optical sales in the Enterprise sector, which includes data centers and accounts for roughly 13% of Corning's sales, have seen a notable increase of 42% year-over-year in the June quarter of 2024.
Corning's advancements in optical technology are not just limited to replacing copper wire. The company's optical products are increasingly in demand due to their power and cooling advantages, which are essential for the efficient operation of data centers.
The securities firm's optimism about Corning is tied to the upcoming business review, which is expected to provide further insight into the company's strategies and performance within the Optical glass fiber segment. The review is keenly awaited by investors looking to gauge the future trajectory of the company's largest revenue-generating segment.
InvestingPro Insights
As Corning Incorporated (NYSE:GLW) garners attention with its upcoming business review, InvestingPro data shows a company with a substantial market capitalization of $34.85 billion, which speaks to its significant presence in the industry. While the company trades at a high earnings multiple with a P/E ratio of 79.34, this may reflect investor confidence in its future growth prospects, considering that net income is expected to grow this year, as indicated by an InvestingPro Tip.
Another InvestingPro Tip highlights Corning's commitment to shareholder returns, having raised its dividend for 13 consecutive years and maintained payments for 18 consecutive years, culminating in a current dividend yield of 2.75%. This consistent return to shareholders is noteworthy, especially for income-focused investors.
Despite a revenue contraction of -6.92% over the last twelve months as of Q2 2024, Corning has shown resilience with a gross profit margin of 34.38%, which suggests that the company maintains a strong ability to convert sales into profit. Additionally, the recent price uptick of 28.37% over the last six months signals a positive market sentiment that may align with Mizuho Securities' upgraded outlook.
For investors seeking a deeper dive into Corning's performance and potential, there are additional InvestingPro Tips available that provide further analysis and context. These tips can be accessed on the InvestingPro platform, offering a comprehensive view of the company's financial health and market position.
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