In a note ominously titled "Nuclear Winter,"
analyst Steven Fox downgraded
to near-term neutral from near-term accumulate in a note to investors this morning.
Fox's title -- a reference to the eradication of life in the wake of a large-scale nuclear war -- fits nicely with his dire view of Corning's near-term prospects. "Our recent field checks lead us to believe that results in Corning's high-margin fiber business (20% to 25% of sales) over the next few quarters will be below even our worst-case scenario," he wrote. The analyst trimmed back his outlook on the company's fiber business and said that domestic pricing pressures would spill over into healthy markets, like Asia.
Earnings estimates were also scaled back as a result of the new outlook. For 2001, per-share earnings are now expected to come in at 75 cents, down from 85 cents, with 2002 earnings pegged at 80 cents, off from $1. Both are well below Wall Street consensus. According to
Thomson Financial/First Call
, analysts expect the company to make 88 cents a share in 2001 and $1 a share in 2002.
Shares of Corning were off 81 cents, or 4.7%, to $16.54 in midmorning trading. The shares hit a 52-week low of $16 shortly after the opening bell.
Up until yesterday's note, Fox's stance on Corning was that purchasing shares below $20 would yield a nice gain within 12 months. But after doing field checks, Fox said it could take a year to a year-and-a-half to produce a solid return when buying Corning below $20.
Despite the near-term difficulties, Fox maintained his long-term buy on the stock "based on Corning's leading position in excellent long-term growth areas."