In a report published Tuesday, BMO Capital Markets analysts maintained a Market Perform rating on Owens-Illinois, Inc OI, while reducing the price target from $25 to $23.
In the report BMO Capital Markets noted, "With 70%+ revenues from outside the U.S., O-I has among the highest exposure to a strengthening U.S. dollar among the packagers. In 2014, 41% of sales came from Europe, 30% from North America, 17% from South America, and 12% from APAC.
Since the time the company released its 4Q earnings report, the euro, Brazilian real and Australian dollar have depreciated against the US dollar by 5%, 21% and 1%, respectively.
"FX is not simply a translation issue for O-I. Exposure to "de facto" dollar-denominated commodity inputs (such as soda ash) is apt to hit margins in selected regions. The effects are particularly acute in South America, where O-I has flagged inflationary headwinds for some time," the analysts said.
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