Display Demand Weighing on Corning in Short Term, but We See Valuation as Attractive

We’re reducing our fair value estimate for narrow-moat Corning to $40 per share from $42 after third-quarter results led us to lower our short-term expectations. Corning’s end markets are softening in line with the macroeconomic environment, with its display glass business and overall profitability being particularly affected. While we anticipate weaker profitability through 2023, we remain confident in Corning’s long-term growth drivers and centralized cost advantage that generates strong profits through cycles and underpins its economic moat. The shares fell 5% in early market trading on Oct. 25; we continue to view Corning as undervalued even with short-term challenges.