Merrill: Corning's LCD Glass Demand Higher Than Expected

Includes: AUO, GLW, LPL
by: Eric Savitz

Corning (NYSE:GLW) believes October and November LCD glass demand was “better than they would have thought,” according to a research note today by Merrill Lynch analyst Steven Fox.

Fox today reported on a field trip he took with clients yesterday to Corning, which included meetings with senior management, including CEO Wendell Weeks and CFO James Flaws.

Fox said the company addressed both concerns about first quarter seasonality as well as the potential for above-average pricing pressure in 2007. He says the company “seems prepared to be more discipline about increment pricing discussions with customers,” i.e., “management seems more willing to walk away from lower priced business on a relatively small portion of the market in order to protect pricing across the entire market.”

Meanwhile, Fox says Corning’s first quarter demand could benefit from a number of factors, including strong Chinese demand, higher LCD TV unit demand per household, larger average screen sizes and LCD TV price declines driven more by retail margin concessions, as well as PC demand.

Fox says the company is well positioned to grow in line with the LCD glass market in 2007, “if not faster,” given its leading market share and reputation with customers for consistent delivery.

The bottom line: Fox reiterated his Buy recommendation on the stock.

Corning today rose 55 cents to $21.55.