Jefferies Has Buy On Owens-Illinois

Jefferies & Co. is out with a research report on Owens-Illinois, Inc. OI and it has a Buy rating and a $35 price target on shares. In a note to clients, Jefferies & Co. writes, "The sell off yesterday was sparked by concerns that as OI ramps capacity back online in N.A. (5% of its capacity), there could be a demand / supply imbalance as the market weakens. Shares started falling precipitously after the negative June GPI data (-5.7%) came out. These concerns are misguided, noting OI and some of is competitors had serious production issues in May and June, and OI didn't bring on its 1st furnace online until late June. We believe the real volume number is closer to down 2 - 3%, and note that OI couldn't meet all of its customer's demand during 2Q. Even with the two furnaces online, it would bump the days of inventory at hand to 27.1 days based on our estimates, well shy of the 5 year average (28.4 days), and low from a historical perspective (refer to Chart 1). Also, OI picked up some share for the 2H11 in N.A., giving us comfort supply remains in good balance." Shares of OI lost $2.32 yesterday to close at $23.54.