Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:
The Bright Picture at Corning by Jay Palmer
Summary: After near-bankruptcy, Corning (NYSE:GLW) has maintained profitability for two years now through innovative technological developments in products for hot markets. The former glass company now produces high quality LCD displays for popular consumer items like computer screens, TVs and digital cameras. LCD technology appears to be beating plasma, and analysts expect demand to grow 30% by 2008. Display revenues were $2.1 billion, or 40% of sales this year—a 22% increase over 2006. Corning's nanotechnology advances in the again-hot field of fiber optic cables offers lucrative potential as giants like Verizon (NYSE:VZ) scrap copper for fiber optic internet infrastructure. Sales of Corning's advanced truck filters and substrates, which convert gas fumes into water vapor, should be buoyed by stricter U.S. transmission emissions rules. Analysts anticipate 100% market growth in 2007 in the filter/substrate market, which Corning dominates with a 60% share. This year, Corning's earnings rose 21%, while shares have risen 24% to $24. But the denoted 17.5 P/E does not reflect 2007 earnings projections. EPS should be $1.35/share this year, and $1.59 in 2008, up from $1.12 in 2006. Bulls say shares could go to $32 by 2008.
GLW 1-yr. chart: