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Corning (GLW) Enters Into Supply Contract With WaveOptics

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Corning Incorporated (GLW - Free Report) recently inked a long-term supply contract with WaveOptics for augmented reality (AR) optics.  Corning will be responsible for providing WaveOptics with ultra-flat, high-index glass wafers required for the manufacturing of waveguides — a major optical part in AR wearable devices.

Per the deal, proprietary nano-structures of WaveOptics will be imprinted on the glass wafers provided by Corning. As a matter of fact, this will facilitate the manufacturing of diffractive waveguides, capable of improving the quality of image in AR wearable devices.

The partnership will also leverage Corning’s expertise in materials science that would strengthen WaveOptics’ position as designer and manufacturer of diffractive waveguides for AR wearables.

Existing Business Scenario

Being a leading innovator in the glass substrate industry, Corning has been developing formulations that are not only suitable for imparting superior picture quality but also taking care of their effects on the environment. The company has several products focusing on the datacenter with a portfolio consisting of optical fiber, hardware, cable and connectors that helps it create optical solutions to meet varying consumer needs. We believe that the expanding fiber optic market is likely to drive Corning’s growth in the long haul.

The company further aims to move forward in the value chain beyond glass and tap the immense potential of the automotive market, while product portfolio strength bodes well for future growth.

In the past six months, this Zacks Rank #3 (Hold) stock has gained 9.9% against industry decline of 1.4%.

However, the company faces price erosion at the rate of 1-2% per quarter in the display business. Therefore, we expect prices to remain a drag on margins despite an improving demand/supply situation.

Key Picks

Some better-ranked stocks in the same space are Arista Networks, Inc. (ANET - Free Report) , Altice USA, Inc. (ATUS - Free Report) and Knowles Corporation (KN - Free Report) . While Arista Networks sports a Zacks Rank #1 (Strong Buy), Altice USA and Knowles carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks surpassed estimates in each of the trailing four quarters, the average beat being 13.35%.

Altice USA exceeded estimates twice in the trailing four quarters, the average beat being 54.23%.

Knowles surpassed estimates thrice in the trailing four quarters, the average beat being 11.04%.

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