Corning Incorporated GLW recently made significant headway in its Life Sciences segment as it secured government funding to substantially augment the domestic manufacturing capacity of glass vials for vaccines. In addition to corporate social responsibilities for contributing to the overall cause of vaccination and treatment of COVID-19 patients, the federal funds are likely to help the company strengthen its position as a leading packaging provider in the healthcare segment.
Corning will receive $204 million from the Biomedical Advanced Research and Development Authority (BARDA), which forms part of the Office of the Assistant Secretary for Preparedness and Response at the U.S. Department of Health and Human Services. The BARDA funding is obtained under the White House’s Operation Warp Speed Initiative that aims to develop, manufacture and distribute an effective coronavirus vaccine.
The investment will facilitate Corning to scale up its manufacturing capabilities at three U.S. facilities — Big Flats, NY; Durham, NC; and Vineland, NJ — to bridge the demand-supply gap for glass containers as pharma companies accelerate clinical trials to develop therapeutic and preventative options for the respiratory illness. In particular, Corning will speed up the production of indigenously-built Valor Glass, which is specifically designed for pharmaceutical use with superior chemical durability and minimal particulate contamination for faster and more reliable drug manufacturing and delivery.
Valor Glass showcases specialized glass qualities that make it up to 10 times stronger than conventional borosilicate glass, thereby reducing the probability of damage and breakage during manufacturing and shipping. It enables faster filling and capping that improves manufacturing throughput by as much as 50% compared with conventional filling lines and reduces the time required to manufacture vaccines and therapies. The high-quality standards equip Valor Glass to be more effective than conventional vials for highly specialized formulations that are typically used in next-generation therapies to counter deadly diseases like coronavirus.
Moving forward, Corning expects to deliver 6-8% compound annual sales growth and 12-15% compound annual earnings per share growth through 2023, while investing $10-$12 billion in RD&E, capital, and mergers and acquisitions. It also plans to expand operating margin and ROIC and deliver $8-$10 billion to shareholders, including an annual dividend per share increase of at least 10%. To achieve its goals, the company expects to add an incremental $3- $4 billion in annual sales and improve profitability by the end of 2023. The company is extending performance under its 2020-2023 Strategy & Growth Framework, and focusing on improving its product portfolio and utilizing financial strength to enhance shareholder returns. Corning’s capabilities are becoming increasingly vital to diverse industries and multiple opportunities support leadership across all of its market-access platforms.
Corning operates on a strong financial foundation, which positions it well for long-term growth while adjusting to near-term conditions. Notably, the company has no debt due for the next two years. It expects to maintain a strong cash balance and generate positive free cash flow for 2020. However, the specialty glass maker has withdrawn its 2020 guidance due to the economic uncertainty and disruption caused by COVID-19. It continues to focus on three core priorities — preserving the financial strength of the company, protecting employees and communities, and delivering on customer commitments.
The stock has lost 10.7% over the past year compared with the industry’s decline of 4.6%.
We remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the industry are Acacia Communications, Inc. ACIA, Ooma, Inc. OOMA and Turtle Beach Corporation HEAR, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Acacia has a long-term earnings growth expectation of 30%. It delivered a positive earnings surprise of 17.7%, on average, in the trailing four quarters.
Ooma has a long-term earnings growth expectation of 47.7%. It delivered a positive earnings surprise of 228.2%, on average, in the trailing four quarters.
Turtle Beach delivered a positive earnings surprise of 46.4%, on average, in the trailing four quarters.
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