Corning Earnings: Optical Growth Strong, but Lack of a Beat Brings Some Rationalization to Shares

Key Morningstar Metrics for Corning

• Fair Value Estimate
  : $105.00
• Morningstar Rating
  : ★
• Morningstar Economic Moat Rating
  : Narrow
• Morningstar Uncertainty Rating
  : High

What We Thought of Corning’s Earnings

Corning GLW reported good first-quarter results at the top end of its guidance ranges, highlighted by optical fiber growth. Core sales rose 18% year over year to $4.3 billion. Guidance calls for continued growth, with $4.6 billion in core sales implying 14% year-over-year growth (6% sequentially).

Why it matters: Optical fiber growth, driven by data center and artificial intelligence demand, remains impressive. Results and guidance met our expectations and were in line with FactSet consensus estimates. We think a beat was priced into shares, leading to as much as a 10% selloff intraday on April 28.

• Specifically, optical sales rose 36% year over year, rising to 45% of total sales. We see the firm’s results and stock performing in line with the rising plurality of optical sales. We were also impressed with optical net margin, which surpassed 20% for the first time in the quarter.
• Management guided to another increase to its long-term Springboard target model at an investor event next week. We already come in well above the current model—we expect $14 billion in incremental annualized sales exiting 2028, above the recently updated $11 billion target.

The bottom line: We raise our fair value estimate for narrow-moat Corning to $105 per share from $95 as we increase our estimates for fiber and solar growth. We still see shares as overvalued despite the negative reaction to guidance.

• Corning shares have more than tripled in the past year and are up 75% year to date. To justify shares trading close to $150, we’d have to assume 10% higher data center growth than our base case, to the tune of 45% annualized through 2030.
• Our own forecast comes in close to 35% annualized data center growth, which we expect to be gated by supply. We like that Corning focuses on rational supply buildouts, derisked by co-investments from customers.