Glass and optical technology products producer Corning (NYSE: GLW)
stock has been on a tear reaching decade-long highs in March 2021. The Company is a post-pandemic beneficiary of the vaccine rollouts
and the acceleration of re-openings
. Corning’s Valor glass is used for COVID-19 vaccine vials. The Company was awarded a $204 million grant by the U.S. Health and Human Services Department to substantially expand domestic manufacturing of its Valor vials. The re-opening of labs is revitalizing its Life Sciences division. The 5G rollout
is a major tailwind as consumers upgrade to 5G smartphones, optical fiber, and infrastructure buildout accelerates and the automotive industry
continues its recovery. The maker of Gorilla Glass is a key supplier to Apple (NASDAQ: AAPL)
as the resurgence of Apple iPhone 12 sales bolstered year-over-year (YoY) growth by 3%. While the business is hitting on all cylinders, prudent investors should administer the patience to wait for and monitor opportunistic pullback levels to scale in exposure.
Q4 2020 Earnings Release
On Jan. 27, 2021, Corning released Q4 2020 results for the quarter ending in December 2020. The Company reported earnings per share (EPS) of $0.52 excluding non-recurring items, beating consensus analyst estimates of $0.48, by $0.04. Revenues grew 19% year-over-year (YoY) to $3.35 billion, beating analyst estimates for $3.18 billion. The Life Sciences segment had sequential sales growth of 23% followed by the Environmental Technologies segment by 17%. Core operating margins rose 110 basis points to 19.4%. Free cash flow grew to $464 in Q4 and $948 million for 2020.
Q1 2021 Guidance Raise
Corning raised its guidance for Q1 2021 with EPS estimates between $0.40 to $0.44 versus consensus analyst estimates of $0.39. The Company estimates Q1 2021 revenues to come n between $3.0 billion to $3.2 billion compared to consensus analyst estimates for $2.94 billion.
Conference Call Takeaways
Corning CEO, Wendell Weeks, set the tone, “In the fourth quarter, this strategy paid off as we grew sales year-over-year in every one of our businesses. At the top were Specialty Materials, with sales up 20% year-over-year, and Environmental Technologies up 19% year-over-year, both significantly outperforming their end markets.” In the auto industry, CEO Weeks anticipates, “the opportunity is large in the range of $100 per car in Corning content”. He highlighted the strong momentum in the Automotive Glass Solutions segment with their in-vehicle displays, “We’re collaborating with industry leaders across the auto ecosystem, including Visteon, LGE, BOE, and Via Optronics to accelerate the adoption of our patented 3D ColdForm technology, which enables lower cost, shaped auto interiors.” The large-scale facility in Hefei, China is fully operational. Strong adoption of Corning technology is demonstrated by the Mercedes-Benz Hyperscreen dashboard display which is nearly five feet of Gorilla Glass.
Corning has been instrumental in COVID-19 testing and vaccine deployment with its Valor vials. Retail demand for TVs continues to be strong, notably in large-sized TVs as evidenced by 60% YoY growth in 75-inch screen TVs. These are more efficiently manufactured in the Gen 10.5 plants, of which the Company is expanding its two newest Gen 10.5 facilities in Wuhan and Guangzhou. The Victus Gorilla Glass is already featured in six Samsung devices and partnered with Apple to develop and manufacture Ceramic Shield. The Company collaborated with Verizon (NYSE: VZ) to enable 5G millimeter wave indoor deployments accommodating enterprise clients as well as Qualcomm (NASDAQ: QCOM) for 5G ready indoor network deployment. Prudent investors should watch for opportunistic pullbacks for exposure into this post-pandemic re-opening play.
GLW Opportunistic Pullback Levels
Using the rifle charts on monthly and weekly time frames provides a broader view of the landscape for GLW stock. The monthly rifle chart has a powerful breakout powered by the stochastic mini pup above the 90-band overbought levels. Shares are hitting decade long highs at the $43.35 Fibonacci (fib) level. The monthly 5-period moving average (MA) support is rising at $38.19 with monthly upper Bollinger Bands (BBs) at $45.37. The monthly market structure low (MSL) buy triggered above $23.48 and the daily MSL triggered above $40.80. The weekly market structure high (MSH) sell triggers on a breakdown below $35.80. The weekly rifle chart has a dual pup breakout composed of the moving average pup breakout with rising 5-period MA at $40.23 and the stochastic mini pup thrusting through the 80-band. The weekly upper BBs were overshot at $42.79. GLW shares are too expensive here and prudent investors should administer patience and avoid chasing. Opportunistic pullback levels sit at the $37.78 fib, $34.87 fib, $33.71 fib, $31.94 fib, and the $30.69 fib. Upside trajectories range from the $46.32 fib upwards to the $54.86 fib level.
Featured Article: What are retained earnings?7 Stocks to Watch When Student Debt Forgiveness Gets Passed
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