Corning Earnings: Another Step Forward While Shares Stay Attractive

Key Morningstar Metrics for Corning

• Fair Value Estimate
  : $155.00
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Narrow
• Morningstar Uncertainty Rating
  : High

What We Thought of Corning’s Earnings

Corning GLW reported solid third-quarter results above the top end of guidance and guided to continued fourth-quarter growth. Non-GAAP sales rose 19% year over year to $5.1 billion, and generative AI sales doubled. Non-GAAP operating margin rose 310 basis points year over year to 22.7%.

Why it matters: Corning is well on track to its attractive “Springboard” targets. We like the firm’s consistent execution, growth, and margin expansion since unveiling Springboard three years ago. Its diversified portfolio and centralized cost advantage set it up well to achieve targets through 2030.

• Optical fiber for AI leads Corning’s growth, and we continue to be impressed with the firm’s ability to rapidly increase its supply to capitalize on demand. Furthermore, Corning’s ability to derisk capital spending with co-investment by customers should please investors.
• We expect optical growth to endure at a high level through 2030, and we believe it may even continue to accelerate. We see longer-term upside from scale-up networking and co-packaged optics, which make up no revenue today.

The bottom line: We maintain our $155 fair value estimate for narrow-moat Corning, and shares look attractive. Shares sold off 4% early intraday, with some market nitpicks about costs and consensus expectations. We focus on the long-term runway, which looks very positive.

• Our model comes in ahead of Corning’s 2030 Springboard target, which calls for exiting 2030 with $40 billion in annualized sales. We model closer to $45 billion. We expect scale-up networking to drive upside, but we like Corning’s position even if we end up being aggressive here.
• Shares are down 50% from late June. We did see exuberance priced into Corning at the peak, but now we think the market has oversold to the downside. For us, this is a moaty, diversified technology leader with strong AI exposure at a discount.