"Corning (NYSE: GLW) is seeing green shoots; it recently announced significant gains in demand for LCD glass due to strong TV sales," says Tracey Ryniec of Zacks Research.
"Corning is a specialty glass, ceramics and optical fiber manufacturer. It produces glass for LCD flat panel TVs and laptops, ceramic substrates, cable for Internet communication networks and advanced optics and specialty glass for various industries.
"Overall, LCD TV demand remains hot. The company is seeing much stronger demand for glass in the second quarter than it anticipated even just a few weeks ago.
"The company expects second-quarter sequential volume to rise about 100% at its wholly owned business which is higher than the 75% growth it projected in May.
"LCD television sales have been hot overseas. Retail data shows April sales rose 22% in Europe and 77% in China. In May, sales climbed 48% in Japan.
"In the US, sales appear to have slowed in April after a still-strong first quarter but retail reports cite a large upward spike in May and the beginning of June.
"Corning has not adjusted its prior LCD glass forecast of 2.1 billion to 2.2 billion square feet for the year, however, the company did say that if the continued strong demand persists it may have to revise at a later date.
"Looking forward, the company expects third-quarter LCD glass volume to be stronger than expected (and in line with the strong second quarter numbers.)
"Covering analysts were already bullish on the company before the recent update about higher glass volumes. 2009 consensus estimates jumped 5 cents to 97 cents in the last month with 4 out of 17 analysts raising during that time. The company is scheduled to report second-quarter results on July 27.
"In our view, fundamentals are solid. Corning is a Zacks #1 Rank (strong buy) stock. It isn't altogether expensive, as it's trading at 16.5x forward earnings. The company has a strong 1-year return on equity of 14.06%."
