Technology

What Is Great for Corning Looks Even Better for Apple and Best Buy

Jon C. Ogg

Published: July 1, 2020 1:09 pm

If there has been one story within the explosive growth of technology in the past two decades that could stand some improvement, glass probably takes the cake. Still, all these devices come with screens, and many investors have had high hopes for Corning Inc. (NYSE: GLW). While Corning has been diversified across many industries for decades, Citigroup sees the company as a winner, based on the coming demand for iPhones, televisions and other screens.

Citi’s Asiya Merchant sees a wave of new purchases over the coming 12 months that will be targeted around smartphones, personal computers and tablets. A survey of 3,000 consumers shows that almost 30% of respondents indicated that they plan on buying a new smartphone over the next year, with almost 25% of iPhone users planning to buy the upcoming 5G iPhone.

The report might sound great for the likes of Corning, but perhaps the real news here is more about Apple Inc. (NASDAQ: AAPL) and Best Buy Co. Inc. (NYSE: BBY) with longer-term favorable trends, even though they are not the target of the Citi report. Apple will be a significant winner if 25% of U.S. consumers really do follow through and buy the new iPhone, and Best Buy gets to sell every one of the other items in the report. Logitech International S.A. (NASDAQ: LOGI) and iRobot Corp. (NASDAQ: IRBT) also get honorable mentions here.

The Citi report noted that brand loyalty is extreme with Apple and that 5G is an important consideration for the next smartphone purchase. Merchant even noted that iPhone users are willing to pay more for the next smartphone purchase than any other brand.

As for PC demand, the driving force is likely to come from consumer demand, while weakness is expected in the commercial side of the business. This might not translate to the premium-priced Mac sales, particularly if they are meant to help interface with work.

Citi’s report also points to strong demand in TV screens. That survey of 3,000 consumers indicated that TV demand is improving despite the recession. Some of that has to be the stay-at-home trend, but the survey noted that roughly 20% of the respondents were planning to buy a TV with a screen of at least 60 inches.

The win for Logitech comes from the survey’s outlook for video game accessories. That may be due to new consoles coming out, but some caution has been raised by other firms that Logitech’s boom from workers staying at home and needing PC and other gear might be factored into the stock after such a strong run. Still, Citi reiterated its Buy rating on Logitech and raised the target to $73 from $60.

As for iRobot, the Neutral rating from Citi is less exciting, even if Merchant’s target price went up to $85 from $60. If anyone has been staying at home and wanting to be isolated, having a robotic vacuum cleaning device should have proven its own worth by now.

After adding the pieces together, Merchant reiterated her Buy rating on Corning and raised her price target to $32 from $24, and she noted a “positive catalyst watch” as well.

Corning was down three cents at $25.88 in midday trading. Its 52-week trading range is $17.44 to $34.25, and its consensus price target was still lower at $23.71.

Apple was up 0.4% at $366.20, and its 52-week range is $192.58 to $372.38. Apple’s consensus target price from Refinitiv is lower at $345.35, but on June 16 Citi had raised its target price to $400 from $310.

Logitech was down 0.5% at $64.90, within  a 52-week range of $31.37 to $65.37.

For all the beneficiaries of these heading into Best Buy, as Apple closes more stores,  it also could be sending would-be buyers to Best Buy. Its stock was up the most of the lot with a 0.8% gain to $87.96. Best Buy’s 52-week range is $48.11 to $91.99, and its consensus analyst target was $86.53.

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