TV Demand Concerns Hurt Corning Investors

• Shares of Corning Incorporated GLW have been trending south in 2015 and are down 21 percent year-to-date.
• JP Morgan’s Rod Hall downgraded the rating on the company from Overweight to Neutral, while reducing the price target from $20 to $18.
• A weak macro environment and its impact on LCD TV shipments are expected to restrict Cornings’ future performance, Hall noted.

Corning’s future performance is likely to be negatively impacted by slower-than-expected shipments due to a weak macro environment. The company’s stock is also fully valued at the current levels, analyst Rod Hall mentioned.

A weak macro environment in Europe and China is expected to result in a 2 percent y/y decline in LCD TV shipments in 2016, in-line with the decline in 2015 and compared to 7 percent y/y growth in 2014.

Corning continues to execute well and its new focused strategy is expected to yield positive results. Hall expects the 4K TV adoption cycle to be a tailwind to the company’s EPS in 2016.

A lower-than-expected decline in the company’s proprietary UHD TV model in 2016 and 2017 is likely to partially offset the decline in non-UHD TV shipments, Hall stated.