Corning’s Diversity Is Its Strength Amid Mixed Q2 Results, and We Maintain Our Long-Term View

We maintain our $42 fair value estimate for Corning shares after it reported second-quarter results. Management guided to a slightly weaker second half of the year than our prior expectations, but this is largely due to short-term end market softness that we don’t view as indicative of fundamental or long-term weakness. We think secular demand strength, predominantly for Corning’s optical fiber, will help offset weaker demand elsewhere. We also credit the firm for maintaining good profitability amid softer demand via pricing actions. Corning’s ability to post solid growth and profitability against multifaceted end market headwinds shows the strength of its diversified end market exposure and centralized cost structure, which also informs our narrow economic moat rating. We think long-term investors have an appropriate margin of safety to get Corning at a discount.