Corning Raises LCD Sales Estimate - Analyst Blog
28 Novembre 2012 - 10:50AM
Zacks
Corning Inc.
(GLW) raised its LCD glass volume outlook
for the fourth quarter of 2012. Following the news, the company’s
shares jumped 6.87% to $12.13.
The company now expects glass
market volume to increase in the mid single digits percentage range
from the previous quarter, in contrast to its earlier view of a
low-to-mid single digits decline. Total LCD glass volume at both
its wholly-owned business and Samsung Corning Precision Materials
Co. (SCP) is also expected to be up mid-single digits. However, LCD
glass prices are still expected to decline sequentially in the
fourth quarter due to the company’s new agreements with
customers.
Management also stated that Gorilla
Glass sales could reach $1 billion by the end of this year.
Specialty Materials segment sales are expected to increase 5%
sequentially and 60% year over year, driven by strong demand for
Gorilla Glass. Life Sciences sales are expected to jump more than
15% sequentially versus the previous guidance of a 5% decline due
to the completion of the Discovery Labware acquisition during the
quarter.
However, equity earnings from Dow
Corning are expected to decline 20% sequentially as opposed to a
25% increase guided originally due to weak demand for solar-grade
polysilicon.
Corning makes Gorilla Glass for LCD
TVs, smartphones and tablet computers. Management believes that
robust U.S. consumer demand for big-screen televisions and
introduction of various new consumer electronics products will
boost Gorilla Glass sales going forward. Additionally, management
stated that the demand for LCD televisions in North America is
turning out to be better than expected.
Moreover, Google's
(GOOG) new Nexus 4 smartphone and Nexus 10 tablet, both feature
Corning's Gorilla Glass 2. With strong sales of Nexus 4 on Google
Play, we expect the demand for Corning's glass substrates to
further increase in the near future. Also, devices from
Apple Inc. (AAPL) and Samsung Electronics Co.,
which use Corning’s glass, are witnessing higher demand from the
Chinese market ahead of their New Year holiday season.
We believe Corning’s improved Glass
outlook clearly indicates higher global demand for cover glass used
in tablet computers and LCD TVs. However, the downward pressure on
glass prices is expected to continue, which might impact results in
the fourth quarter and beyond.
Corning is primarily a developer of
advanced glass substrates for multiple markets. The company’s third
quarter earnings beat the Zacks Consensus Estimate by 2 cents, or
7.1%. Revenues of $2.04 billion were up 6.8% sequentially but down
1.8% from the year-ago quarter.
The company’s Senior Vice President
and Corporate Controller Tony Tripeny stated that the strength in
LCD glass sales and continued strong demand for Gorilla Glass would
likely drive earnings growth in the coming quarters.
However, excess capacity in the
market place, price pressure and competition remain challenges for
Corning’s glass business.
Currently, Corning has a Zacks #3
Rank, which implies a Hold rating on a short-term basis.
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