Goldman Sachs Wants People to Sell One of Apple's Key Suppliers

Risks to estimates and valuation could spell trouble for Corning's compressed profits.
By Kinsey Grant ,

Corning Inc (GLW) - Get Report stock slipped 3.13% to $28.49 Tuesday after Goldman Sachs analyst Doug Clark downgraded the specialty glass and ceramics company to "sell" from "neutral" with a $26 price target that implies a 12% downside for the stock.

Clark said Corning's diversification and growth in Optical and Gorilla Glass products will be weighed down by a "combination of risk to estimates (weaker glass volumes, FX reset) and valuation (reducing capital allocation tailwind, shares are trading well above historical valuations)."

The gap between earnings per share growth and net income declines for Corning has widened, Goldman noted, which could become clearer if buybacks continue to slow. Any growth in EPS hasn't reflected "challenging underlying fundamentals," according to Clark.

Clark's new earnings estimate for 2017 is $1.64, down from $1.70 per share in his previous estimate. Corning stock has traded up 17.5% since the start of the year.

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