From Displays To Gorilla Glass, Corning's Got It All

• Shares of Corning Incorporated GLW have declined 23.33 percent year-to-date.
• Vijay Bhagavath of Deutsche Bank has initiated coverage of Corning with a Buy rating and price target of $21.
• Bhagavath believes that the company’s fundamentals for FY16 and beyond appear to be improving and that the stock is Deutsche Bank’s Large Cap Value Idea.

Industry checks suggest improving fundamentals for FY16 and beyond, given that Corning’s Displays and Wireless businesses have returned to growth in FY16 and the Datacenter Optical business has been witnessing continuing strength.

Bhagavath believes that Corning is a “solid capital return story.” According to the Deutsche Bank report, 4K TV refresh is likely to be a “secular growth theme” in FY16 and beyond, with the Displays business witnessing growth once again in FY16.

Corning’s ongoing cost reduction initiatives are expected to drive the company’s EPS in FY16 and beyond, while the Datacenter Fiber buildouts have been seeing continuing strength. The company has also indicated that it has been witnessing strong sales for Gorilla Glass for tablets and smartphones.

With the appointment of a new CFO expected in November 2015, Bhagavath believes that the incoming CFO would “take a fresh look at buybacks and acquisitions that benefit topline and margins.”