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Corning Sets 2020-2023 Strategy and Growth Framework Targets

Zacks Equity Research

Corning Incorporated GLW, in its recently held meeting with investors and industry analysts, has unveiled 2020-2023 Strategy and Growth Framework. The company also discussed progress and pipeline developments across its five market-access platforms.

Corning aims to deliver continual growth and create additional value for shareholders on the back of benefits from its investments, adoption of technologies aligned to key industry trends and its cohesive product portfolio. The specialty glass maker’s new long-term goals should build on the success of its 2016-2019 Strategy and Capital Allocation Framework, while capturing future organic growth opportunities.

Markedly, the company has created substantial shareholder value through successful execution of its Strategy and Capital Allocation Framework over the past four years. In fact, Corning believes that by the end of 2019, it will have met or exceeded all the goals set in late 2015. This includes returning more than $12.5 billion to shareholders, while investing $11 billion to extend its market leadership.

Management expects to record 6-8% compound annual sales growth, primarily driven by organic growth in the company’s market-access platforms. Specifically, Optical Communications segment is anticipated to grow about twice as fast as the passive optical market, driven by 5G and next-gen hyperscale data centers.

Meanwhile, Automotive market sales are likely to double by 2023, driven by growth in gasoline particulate filters and the company’s new automotive glass solutions business. Mobile Consumer Electronics market sales are projected to continue on a path to doubling, as Corning captures more value per device and wins in new device categories with Corning Gorilla Glass and other innovations.

The company expects Life Sciences Vessels market sales to grow at least double the industry rate, driven by cell and gene therapy-related demand, while the launch of Valor Glass for pharmaceutical packaging has potential to become a multi-billion-dollar franchise. Corning’s Display unit is expected to be stable as price declines remain moderate, television screen size continues to increase and Gen 10.5 plants become active.

Moreover, Corning expects 12-15% compound annual earnings per share growth, supported by strong sales growth, higher operating margin and continual share repurchases. It anticipates to generate $16-$18 billion in total operating cash flow before RD&E (Research, Development & Engineering), up from $13 billion expected in 2016-2019 period.

Corning is likely to invest $10-$12 billion in RD&E, capital and mergers and acquisitions to capture near and long-term growth opportunities, while focusing primarily on organic growth. The company anticipates to grow dividends per share at least 10% annually, and to repurchase shares. It expects to distribute $8-$10 billion to shareholders. Solid fundamentals, together with ability to meet long-term goals, instill optimism among investors.

Corning has long-term EPS growth expectation of 9.7%. Driven by diligent execution of operational strategies, the stock has rallied 7% compared with the industry’s rise of 5.4% in the past year.



Corning currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader industry are Knowles Corporation KN, Turtle Beach Corporation HEAR and Motorola Solutions, Inc. MSI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Knowles has long-term earnings growth expectation of 10%.

Turtle Beach has long-term earnings growth expectation of 9%.

Motorola has long-term earnings growth expectation of 7.7%.

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