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UBS analysts told investors in a note that the company’s growth recovery is nearly priced in, while its slower recovery has led to a more balanced view.
“We reduce estimates on a slower recovery in customer demand and see the stock more fairly priced,” wrote the analysts. “We believe GLW’s largest
business, display glass (~45% of income), has reached trough levels with 1Q LTM earnings ~$693M vs 2017-2022 avg ~$825M, and we continue to model sequential improvement starting in 2Q.”
They added: “Recent pricing announcements aid the topline recovery, though earnings impact could be offset by ongoing cost inflation. But with continued downstream inventory mgmt (TVs/screens) and weaker consumer demand (also impacting smartphones/specialty), we see a slower recovery, now modeling 2023 seg. earnings of $738M vs $780M prior. And the higher growth we anticipated in optical fiber appears to be perhaps 1-2 years away.”
UBS expects GLW EPS to grow 27% in the second half of 2023, compared to the first half, and 23% year-over-year in 2024, putting them 2% below consensus. The analysts concluded that with GLW trading near its historical average on a near-term basis, they see less room for mid-term upside.
