On Monday, O-I Glass Inc. (NYSE:OI) saw its price target lowered by RBC Capital from $20.00 to $18.00, though the firm kept its Outperform rating on the stock. The adjustment comes as the company faces a reduction in production and sales volumes for the year 2024.
RBC Capital's decision reflects an anticipated 3-4% curtailment in production, mostly expected in the third quarter, and a 1-2% decrease in sales volumes for 2024. Despite these challenges, RBC Capital remains optimistic about O-I Glass's prospects, citing the new management's immediate production adjustments and revised guidance.
The firm believes that O-I Glass's recent strategic initiatives, including the 'Fit to Win' plan, will position the company to achieve an earnings per share (EPS) of $1.70 in 2025. This figure approaches RBC Capital's estimate of a normalized EPS of $2.20 and aligns with O-I Glass's long-term target of $1.45 billion in EBITDA by 2027.
The Outperform rating is sustained by the analyst's confidence in the company's direction under new leadership. This sentiment is grounded in the expectation that the company's strategic adjustments will lead to improved financial performance in the coming years.
O-I Glass Inc. is now set to navigate through the forecasted production and sales volume reductions with strategic measures that could potentially strengthen its market position and financial health by 2025 and beyond.
InvestingPro Insights
Recent data from InvestingPro provides a nuanced view of O-I Glass Inc.'s financial health and market performance. With a market capitalization of $1.9 billion, the company is navigating through its challenges with a significant debt burden, as indicated by one of the InvestingPro Tips. This is a crucial factor for investors to consider, especially in light of the company's production and sales volume reductions for 2024.
Despite not being profitable over the last twelve months, analysts predict that O-I Glass will turn a profit this year. This aligns with the positive outlook from RBC Capital, which anticipates the company's 'Fit to Win' plan to contribute to an EPS of $1.70 in 2025. Meanwhile, the company's aggressive share buyback strategy could signal management's confidence in its future prospects, another InvestingPro Tip that investors might find reassuring.
Key financial metrics show a P/E ratio of -6.52, reflecting the company's earnings challenges in the recent past. However, the adjusted P/E ratio for the last twelve months as of Q2 2024 is 8.03, indicating potential improvement in earnings relative to its share price. Additionally, with a 16.21% strong return over the last month, there seems to be a growing investor confidence in the company's ability to navigate current headwinds.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that could provide further guidance on O-I Glass Inc.'s outlook. These tips, along with real-time metrics, can be found at the company's InvestingPro page.
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