Corning's Q4 Reaffirms Our Expectations for Long-Term Growth Despite Short-Term Margin Pressure

Narrow-moat Corning capped off the year with strong fourth-quarter results, coming in at the top end of its guidance ranges for the top and bottom lines. We’re raising our fair value estimate to $42 per share from $40 to reflect greater confidence in Corning’s long-term optical fiber growth as it adds manufacturing capacity. We think Corning’s fourth quarter--and 2021 in general--show the firm reaping the benefits of its diverse end-market exposure and enjoying broad-based demand. We maintain our view that the firm’s optical segment will be the greatest contributor to growth in the short and long term. Corning battled margin pressure throughout 2021, but we have confidence that new pricing arrangements and a renewed focus on profitability from a new CFO will bring it back toward historical midcycle levels in 2022 and 2023. The shares leaped on positive guidance, and we think Corning is fairly valued.