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Corning (GLW) Hikes Display Glass Prices to Offset Higher Cost

Corning Incorporated GLW has announced a 20% hike in its display glass substrate prices across all geographic regions. The move is intended to offset higher production costs, as the company revealed that it is forced to pass on the inflated raw material and energy costs to consumers to sustain profitability.

Despite the price increase, the company expects demand for glass products to pick up in the second half of the year, driven by the continued recovery of the display industry. In addition, healthy demand trends are likely to be propelled by seasonality factors and improved market conditions in China.

Corning is also benefiting from improved demand for its fiber optic solutions. A surge in demand for broadband connectivity has led to a wide proliferation of fiber infrastructure across the globe. Multiple factors are likely to drive the company’s fiber-optic solutions business over the next several years, primarily the increasing use of mobile devices that require efficient data transfer and networking systems. Supporting this trend is the proliferation of clouds, which is resulting in increased storage and even computing on a virtual plane.

Since both consumers and enterprises are using the network more, there is a tremendous demand for quality networking. As optical networks are more efficient and most existing networks are copper-based, the demand for optical solutions is solid. Corning has several products focused on the datacenter with a portfolio consisting of optical fiber, hardware, cable, and connectors that help it create optical solutions to meet evolving customer needs.

The company is making various efforts to align its cost structure to the demand environment while maintaining the flexibility to address changing market conditions. Despite continued chip shortage and inflated raw material prices, Corning expects to witness 6-8% compound annual sales growth and 12-15% compound annual earnings per share growth through 2023 while investing $10-$12 billion in research, development & engineering, capital and mergers and acquisitions. It plans to expand its operating margin and return on invested capital and deliver $8-$10 billion to shareholders, including an annual dividend per share increase of at least 10%.

To achieve its goals, the company expects an incremental $3-$4 billion in annual sales and an improvement in profitability by the end of 2023. Corning is extending performance under its 2020-2023 Strategy & Growth Framework and focusing on improving its product portfolio and utilizing financial strength to enhance shareholder returns.

The stock has lost 8.7% over the past year against the industry’s growth of 8.8%.

Zacks Investment Research
Zacks Investment Research

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Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Picks

InterDigital, Inc. IDCC, sporting a Zacks Rank #1, delivered an earnings surprise of 170.89%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 579.03%. It has long-term earnings growth expectation of 13.9%.

It is a pioneer in advanced mobile technologies that enables wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks.

Akamai Technologies, Inc. AKAM, sporting a Zacks Rank #1, delivered an earnings surprise of 4.9%, on average, in the trailing four quarters. It has long-term earnings growth expectation of 10%.

Akamai is a global provider of content delivery network and cloud infrastructure services. The company’s solutions accelerate and improve the delivery of content over the Internet, enabling faster response to requests for web pages, streaming of video & audio, business applications, etc. Akamai’s offerings are intended to reduce the impact of traffic congestion, bandwidth constraints and capacity limitations on customers.

IHS Holding Limited IHS, carrying a Zacks Rank #2 (Buy), is another key pick. Based in London, the United Kingdom, it is one of the largest independent owners, operators and developers of shared communications infrastructure in the world by tower count.

IHS Holding has more than 39,000 towers across 11 markets — Brazil, Cameroon, Colombia, Egypt, Kuwait, Nigeria, Peru, Rwanda, South Africa and Zambia. The stock has gained 60.7% in the past six months.


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