Corning's (GLW +2.8%) earnings power will be boosted by a multi-year TV replacement cycle and its multiples could benefit from glass industry consolidation caused by the poor balance sheets of rivals, thinks Susquehanna's Mehdi Hosseini, upgrading shares to Positive.
Hosseini also forecasts "material improvement in the cost and margin profile" for Gorilla Glass thanks to the Samsung deal and the shifting of some production from Japan to South Korea. That, in turn, will allow Gorilla Glass to maintain at least a 10x cost advantage relative to sapphire, which GT Advanced (GTAT -0.5%) is set to make large volumes of for Apple.
He also points out 45% of 2013 Gorilla Glass demand came from tablets, a market for which sapphire could remain cost-prohibitive for a while.
Global TV shipments fell in both 2012 and 2013, thanks to high penetration rates and a shift in consumer electronics spend towards smartphones/tablets. DisplaySearch has forecast modest growth for 2014.