Corning (GLW): Could They Benefit from 3D Televisions?

GLW is becoming more interesting with the emergence of 3D televisions. Samsung and Sony have stated that they are preparing for bigger sales. The Best Buy earnings report also alluded to it. They also said that, "...unit sales of flat-panel televisions, notebook computers and cell phones each experienced such large increases that they contributed to comparable sales gains in those categories even though their average selling price has been declining."

There's a possibility that 3D could be the next big thing, like LCD's were a few years ago. GLW was the company that benefited because they make the displays for the TV's. According to GLW’s most recent 10k, displays for TV's, smartphones & computers compose up to half their revenue. They also have a partnership with Samsung for displays, and if Samsung is going to push big, they should definitely benefit. Even if 3D does flop, there are 2 billion TV's in the world and only 13% are LCD's, so there is definitely room for growth. Other segments they are involved in are telecommunications and fiber optics with an agreement with Verizon, environmental technologies and life sciences.

They are trading at 15.6x earnings at the current $19.98 price, which is cheap in comparison to its industry. Its industry P/E is 22x. The 5-year PEG is .86, which is appealing. EPS revisions have been revised up recently and RBC Capital Mkts just upgraded GLW from Sector Perform to Outperform with a price target of $26. According to Mark Sue of RBC Capital, “... strong retail demand for LCD TVs and a potential upgrade cycle by the recovering consumer may drive improving earnings growth.” It's possible to expect the average analyst estimate to be lifted from its current $1.78/share for Dec 2010. However, if it doesn't and investors are willing to pay only 16x earnings, the target price for Dec 2010 average EPS could reach $28.16.

According to CNBC's Fast Money on April 21, 2010

Pete Najarian has spotted an unusual options action in Corning which is trading at $20.40, up 1.49% today. A large volume of June 23 calls traded this week combined with a large number of May 21 and 22 calls traded last weeks suggests to him this stock could have more room on the upside.

Do not rely solely on the opinions of this blog or any other site when making an investment decision. Any investment could result in the risk of loss of capital. Please consider seeking professional advice before initiating your investment ideas.