GLW Stock Forecast: Cheap 5G Smartphones And Cheap 5G Data Plans Are Tailwinds For Corning

motek 1The GLW Stock Forecast article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary:

  • The increasing availability of affordable 5G phones is why I have a $48 price target for Corning Glass’ stock.
  • The lockdown rules of the pandemic are not stopping telcos from upgrading their cell sites to 5G. Cheap unlimited 5G plans are fueling 5G smartphone sales.
  • Corning Glass Gorilla is still the dominant brand in smartphone/tablet display glass protection.
  • The antimicrobial properties of the new Gorilla Victus protection glass display make it a must for smart TVs, smartwatches, laptops, tablets, and touchscreen displays.
  • GLW is still an affordable stock with a net income margin higher than 12%. GLW has a Piotroski score of 7.

Congratulations to those who acted on my August 3, 2020 buy recommendation for Corning Incorporated (GLW). A little over a year ago I argued that GLW deserved a price target of $35. GLW posted a new 52-week high of $46.82 last April. Unfortunately, the earnings beat last July Q2 ER did not prevent GLW from trading sideways between $40 and $41.50 price levels for the last two months. This lethargic emotion from investors is understandable. The lingering pandemic is a headwind for any company that sells electronic components.

(Source: Seeking Alpha)

Even Seeking Alpha’s Quant Rating AI only has a Neutral outlook for GLW. The general investing public is a sit-on-the-fence mood for Corning. Well, I’m am more decisive and courageous than Seeking Alpha’s algorithm. I am again endorsing GLW as a buy. I’m giving it a 1-year price target of $48. My optimism is buoyed by the bullish 1-year I Know First algorithmic score of Corning’s stock. The stock prediction algorithm of I Know First gave GLW a 1-year trend score of 110.61. This is above my threshold score of 100 before I accept that I Know First has a clear buy signal for any stock.

The other reason why GLW can breach $48 is my wife’s new Xiaomi (XIACF) M3 Pro 5G phone. This awesome 5G phone from China came with Corning’s Gorilla 3 glass protection layer. Like it or not, Corning is still the dominant supplier of protective glass for smartphone/tablet displays. Entry-level phones get Gorilla 3, mid-range phones come with Gorilla 4. Phones and tablets priced higher than $400 usually get Corning’s Gorilla 5 or Gorilla 6 glass.

Xiaomi and Chinese brands are selling affordable 5G phones that retail for less than $200. This is good for Corning because developing countries are already aggressively upgrading their 3G/4G networks to 5G. Stiff competition here in the Philippines is forcing PLDT (PHI) to allow its Smart wireless subsidiary to even offer unlimited 7-day 5G cellular data for just 299 pesos ($5.98).

The investment thesis of this article is that cheap smartphones plus cheap 5G data plans are great for Corning’s $939 million/quarter Display Technologies business segment. The Q2 revenue of Corning is only $3.5 billion (+35% Y/Y). Display Technologies, therefore, contribute more than 25% of Corning’s quarterly revenue. Anything that could improve the topline of Corning is worth evaluating & discussing.

(Source: Corning Incorporated)

Corning Is The Dominant Alpha Gorilla In Smartphone Glass Displays

Go long on GLW because its Gorilla brand of protective glass is used in 73% of smartphones since 2016. The $482 billion smartphone industry is still growing at a 6% CAGR. My fearless forecast is that the 6% CAGR in smartphone sales is already enough to give Corning a forward revenue CAGR of 10%. The top smartphone vendors in the world rely on Gorilla Glass to protect their products from careless owners. Apple (AAPL) is even giving $45 million to accelerate Corning’s Gorilla glass research. The iPhone and iPad products of Apple rely on custom Gorilla Glass protection glass products.

(Source: Technavio)Forecast and Analysis 2021-2025

The antimicrobial feature of the new Gorilla Victus glass products will make it in-demand for smartphones, tablets, laptops, smart TVs, smartwatches, smart displays, medical/scientific monitors, and touchscreen displays of ATMs/PoS machines.

Go long on GLW because the Display Technologies segment could become a $1.5 billion/quarter tailwind. If this conjecture proves true, GLW’s price can shoot up easily to my $48 PT. The 73% market share of Gorilla Glass means Corning can dictate its own price tags. Corning does not have to do any pricing war against its struggling rivals like Asahi Glass Dragontrail.

GLW’s huge market success in glass display technologies is why it enjoys a TTM net income margin of 13.14%. This is more than double the electronics components’ sector average of 5.94%. The TTM EBIT margin of Corning is 16.17% is also 86.18% higher than its sector’s average of 8.69%.

(Source: Seeking Alpha Premium)

GLW Stock Forecast: Conclusion

Corning has obvious tailwinds from cheap 5G phones and affordable 5G cellular data plans. The dominant 73% market share of Gorilla Glass in the smartphone glass protection business is enough incentive for us to exploit the low valuation ratios of GLW. Corning is more profitable than its sector peers but GLW still trades at less than 20x Forward GAAP P/E valuation. GLW has a good chance of breaching my 1-year PT of $48.

(Source: Seeking Alpha Premium)

GLW has a bullish 1-year signal (110.61) from I Know First and it is relatively undervalued. This should be enough to convince you to go long on Corning Incorporated. The Piotroski score of GLW is 7, indicating it is a great value play investment. Study the chart below. The monthly technical indicators are also saying Corning’s stock is a strong buy. This is another strong incentive for long-term investors to put their trust in GLW.

(Source: Investing.com)

Past Success With GLW Stock Forecast

I Know First has been bullish on GLW’s shares in past forecasts. On our June 25, 2020 premium article, the I Know First algorithm issued a bullish GLW stock forecast. The algorithm successfully forecasted the movement of GLW’s shares on the 1 year time horizons. GLW’s shares rose by 52.53% in line with the I Know First algorithm’s forecast.

GLW is predicted to hit the stock price target

Here at I Know First, our AI-based stock forecast algorithm has modeled and predicted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. The database used is 100% historical data free from human-derived assumptions and is constantly evolving with newly added data and adapting to changing market situations. Today, we are producing daily forecasts for over 10,500 assets such as forex forecasts, as well as gold predictions, while also providing the latest Apple stock news. These forecasts generated by our quant trading tool are used by institutional clients, as well as private investors and traders to identify the best investment opportunities in the market.

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