This stock to ride ultrahigh def TV sales: Analyst

Published Thu, Jan 15 201512:24 PM EST

Evelyn Cheng @in/evelyn-cheng-53b23624 @chengevelyn

For all the hype about sapphire glass, Corning's Gorilla Glass still rules smartphone screens, and the company's Iris Glass could soon dominate flat-screen TVs, a JPMorgan analyst said in a report Thursday. JPMorgan upgraded Corning to "overweight" from "neutral" and increased its price target to $26, citing "increased ultrahigh definition momentum." Corning announced its Iris light-guide glass at CES last week. The material allows production of very thin side-lit LCDs. "If successful, Iris would increase Corning's glass content by 50 percent for TVs that use it. In our central case, we calculate that Iris could provide an earnings per share upside of 1 percent in 2015 and 4.7 percent in 2016," lead analyst Rod Hall said in the note. "In our central case, we expect Iris to capture 47 million or 56 percent of 2016 LCD edge-lit display units. We then use Corning's display segment average selling price to estimate revenue generated by Iris shipments," he said. Read More BlackBerry plunges after denying Samsung talks He highlighted a 70-inch, less than half-inch thick TV using Iris Glass that Sharp demonstrated at CES last week. The glass replaces plastic guides that channel light from the LEDs around the edge of the panel to the back of the LCD, the report said. Glass is stronger than plastic and doesn't need bulky supports, allowing for ultrathin screens. "Unlike Gorilla cover glass we believe that thinner screens enabled by a glass light guide have the potential to create real consumer interest. A glass light guide would effectively increase Corning's glass sales into each TV by about 50 percent," the note said. "We increase our TV forecasts following our analysis on ultrahigh definition TV adoption. Our estimate for LCD TV shipments rises by 4.6 percent to 233 million units for 2015," the report said. Revenue from specialty materials, which includes Gorilla Glass, also got a 5.5 percent boost to $1.26 billion for 2015 in the report on a better outlook for smartphones. In the near term, JPMorgan's fourth-quarter earnings per share estimates for Corning remain the same at 40 cents a share, while the expectation for 2015 was revised higher by nearly 8 percent to $1.71. Hall noted that the full-year earnings per share growth of about 14 percent for 2015 tops the 11 percent for the competition group, which means higher multiples are likely. Read More 4K TVs: Lack of content could hurt The possibility of a new TV screen glass comes amid reports about LG 's and Samsung 's struggles to make their highly touted OLED screen take off, and suggestions to postpone increased production of televisions with the thin, flexible material.

Sharp television sets

Rick Wilking | Reuters

JPMorgan upgraded Corning to "overweight" from "neutral" and increased its price target to $26, citing "increased ultrahigh definition momentum."