JPMorgan opens catalysts watches in hardware and networking into Q4

Heading into the hardware and networking Q4 reports, JPMorgan placed Wolfspeed (WOLF) and Xerox (XRX) on “Positive Catalyst Watch,” and Corning (GLW) on “Negative Catalyst Watch.” The firm also recommends a pair trade of Flex (FLEX) over Jabil (JBL) as it sees the valuation multiples between the two companies “compressing over the upcoming earnings cycle.” With Wolfspeed’s near-term revenue being driven by its capacity ramp, the company’s sales should be more resilient than investors are embedding in the current share price, the analyst tells investors in a research note. Xerox has taken cost actions at the start of the year, which will accelerate the realization of the $300M of cost reduction planned as part of the recently outlined Project Reinvention, adds JPMorgan. It adds that while Corning shares have rebounded, there is limited signs of recovery in its various end-markets of TV, autos, optical deployments. With modest recovery till date in smartphones, the revenue outlook for 2024 is expected to be challenging, the firm says.