Yesterday, JPMorgan’s analyst Rod Hall downgraded Corning Inc. GLW from Overweight to Neutral. He also cut the target price by 11.11% to $18.
Hall believes that European and Chinese macro pressures are weighing on the company’s LCD TV sales. JPMorgan expects LCD TV shipments to decline 2% year-over-year in 2016, as against a 7% year-over-year increase in 2015, according to The Street.
According to JPMorgan, "By the end of next year, depending on the macro situation, we believe consumer demand for 4K TVs is likely to be strong, however, with China and Europe flagging and the U.S. not looking particularly strong either we suspect that investors can wait longer before deciding to own stocks exposed to 4K penetration growth".
Corning was down 1.73% to $18.20 in early morning trade yesterday. The stock closed 2.32% lower at $18.09.
Our Take
Over the last 60 days, 5 out of 9 analysts polled by Zacks revised the estimates for the next year to $1.46, down 2.7%. For the current year, 8 out of 9 analysts lowered the estimates by 4.3% to $1.38, down over the same time frame.
We believe that Corning’s strength lies in fiber optics, leadership in glass substrates, environmental regulations, strong relationships and share buyback policy.
However, a slowdown in tablet demand and price erosion in the display business might prove to headwinds. Currency is also expected to hurt results, going forward, though most of it has been hedged.
Thus, we have Zacks Rank #3 (Hold) rating on Corning shares.
Investors may consider stocks like Stamps.com Inc. STMP, Mercadolibre, Inc. MELI and Amazon.com AMZN. While Stamps.com and Mercadolibre sport a Zacks Rank #1 (Strong Buy), Amazon carries a Zacks Rank #2 (Buy).
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