Deleveraging Nears End? (In Korea...); GLW/CLS Analyst Callback; GLW, KLAC, NXPI, QRVO, STX, SWKS: US Hardware / Semiconductors Sector Specialist Commentary

Research evidence excerpt

Deleveraging Nears End? (In Korea...); GLW/CLS Analyst Callback; GLW, KLAC, NXPI, QRVO, STX, SWKS: US Hardware / Semiconductors Sector Specialist Commentary

* for putting this stock on Negative Catalyst Watch and sticking with the call even after

the stock retreated to $153. STRONG. Post print, our feeling is that the name feels easier to own here (a view that’s been pretty

consensus for the past week or two among ppl we’ve spoken with) – particularly with ECOC and OCP coming up in the fall. This

morning Joseph Cardoso formally updated his model acknowledging the print disappointed the buy-side:Optical-

Enterprise was genuinely strong (AI sales nearly doubled, order rates accelerated), while Optical-Carrier came in well below

expectations on customer lumpiness. Compounding the miss were a cautious 2H tone on Gorilla Glass/smartphones due to

memory headwinds (and many people I spoke with yesterday were trying hard to extrapolate this to AAPL), a weaker yen

assumption (¥150 vs. ¥120 prior for 2027+), and a higher capex run-rate (~$2bn in '26, ~$2.5bn in '27) — though the latter is

largely customer-funded. 3Q26 guidance was mixed: revs guided to $4,950mn (below the $4,997mn consensus) but EPS midpoint

of ~$0.87 was in line, with improving optical mix supporting margins. Joe sees none of these near-term headwinds altering the

long-term earnings power, with management remaining bullish on both enterprise and carrier optical, scale-out/scale-up, and

Solar inflecting positively. The valuation premium finally coming down could start to interest people… Joe cut his Dec-27 PT to

$170 (from $200), applying a 30x P/E multiple on 2028E EPS (vs. 35x prior) to better align with the optical peer group.