Corning stock jumps 5% after this analyst sees opportunity after recent sell off

Shares of Corning Inc. rose on Monday after Truist Securities upgraded the optical networking and specialty glass maker to Buy from Hold, arguing that the stock's steep decline in July has created a more attractive entry point for investors.

Corning shares GLW gained 5.6% to $146.12 on Monday after closing 2.2% higher on Friday.

The move came after the stock suffered a nearly 46% decline in July, marking its worst monthly performance in 24 years after the company's third-quarter guidance failed to meet Wall Street expectations.

The July selloff made Corning one of the worst-performing stocks in the S&P 500 during the month, with shares ending lower in 16 of 22 trading sessions.

Despite the sharp correction, the stock remains up 61% year to date and has gained 130% over the past 12 months.

Truist sees attractive entry point after selloff

Truist analyst Matthew Niknam upgraded Corning to Buy while lowering his price target to $175 from $205.

The revised target still implies about 27% upside from Friday's closing price.

In a note to clients, Niknam said the recent decline has improved the stock's risk-reward profile.

“Simply put, we have waited for a more reasonable entry point to get more constructive, and we now have one post a ~45% pullback in July,” Niknam wrote.

The analyst said the upgrade is supported by continued customer spending in Corning's optical segment, expectations for accelerating revenue growth over the coming years, improving operating margins, and a projected 30% compound annual earnings growth rate through 2029.

Truist also noted that customer demand remains strong across artificial intelligence, data center infrastructure, and fiber-to-the-home deployments.

The firm highlighted Corning's recently introduced Photonics MAP as an additional long-term growth catalyst.

Corning currently trades at 32 times Truist's 2027 earnings estimates and 24 times its 2028 estimates.

AI sentiment remains a key risk

Corning has become one of the major beneficiaries of the artificial intelligence infrastructure investment theme, with its Optical segment accounting for roughly 45% of company sales.

However, Truist cautioned that investor sentiment around AI spending remains an important risk.

“Fears around durability of the ‘AI trade’ and sustainability of elevated hyperscaler capex could weigh on sentiment, given the Optical segment (~45% of sales) is driving the lion’s share of GLW’s forward growth,” Niknam wrote.

The stock's sharp decline in July reflected concerns over AI-related valuations after the company issued guidance that largely matched expectations but failed to exceed investors' elevated forecasts.

Other analysts remain constructive but cautious

UBS also maintained a positive stance on Corning, reiterating its Buy rating while lowering its price target to $196 from $228.

Analyst Joshua Spector said the recent selloff appeared overdone, with only modest revisions to earnings estimates reflecting a more conservative outlook for fiber capacity expansion and the timing of the company's photonics business.

Morgan Stanley, however, maintained an Equal Weight rating while lowering its price target to $165 from $180.

The firm said Corning's second-quarter results largely met expectations but noted that sold-out conditions limit additional upside.

Analysts also pointed out that much of Corning's business operates under long-term contracts, leaving limited room for further pricing gains or earnings-per-share expansion.

For the third quarter, Corning expects adjusted earnings between $0.85 and $0.89 per share on revenue of $4.9 billion to $5.0 billion.

Wall Street is expecting earnings of $0.87 per share on revenue of approximately $4.99 billion. The company previously reported second-quarter earnings of $0.78 per share on revenue of $4.74 billion, exceeding analysts' estimates.