Corning's Valor Glass In The Spotlight

Summary

• Once the COVID-19 vaccine enters mass production, the world could experience a glass vial shortage.
• The US government is betting on Corning's Valor Glass to supply a large part of the added demand for vials in the US.
• Operational and Pricing Risk: no guarantee that Corning will be able to ramp up production as planned, and pricing pressures could leave the company with little to no profit.
• Healthy 2.71% dividend yield and strong Gorilla Glass demand limit downside risk.

Corning (NYSE:GLW) may be known for its Gorilla Glass and Pyrex brands, but I believe one of its lesser-known brands, Valor Glass, will be in the spotlight going forward. The world is in a rush to develop and mass-produce an effective vaccine for COVID-19, but once it's ready, billions of glass vials will be needed to safely transport and administer it. This surge in demand will require a significant increase in production capacity. Corning is one of the few companies with the potential to fill the extra demand, and I believe that will be a huge boost to its business.

Company Overview

Corning Inc., founded 169 years ago, is one of the oldest and most recognized American companies. The company is a leading innovator in material sciences with a focus on specialty glass, ceramics, and related materials. It has several well-known brands, like Gorilla Glass, Pyrex, Falcon, Axygen, and others.

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In 2019, the company reported total sales of $11.5 billion, with five reportable segments: Display Technologies, Optical Communications, Specialty Materials, Environmental Technologies, and Life Sciences. The company has a wide range of products and patents, as well as a solid track record with its R&D investments, which should translate into solid long-term growth.

Among its most important products is Gorilla Glass, which is used in several smartphones, including the iPhone. In 2019, Gorilla Glass sales totaled $1,180 million (10.1% of net sales). With 5G deployment on the way, many consumers will look to upgrade their phones, which should result in higher Gorilla Glass sales. Corning will surely look to capitalize on this new smartphone cycle. Nonetheless, I believe the biggest catalyst going forward will be the development of its Valor Glass brand.

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Glass Vial Shortage and Valor Glass

Glass Vial Shortages

Since the start of the

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, but may initiate a long position in GLW over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.