NEW YORK -- Shares of Owens-Illinois gained 5 percent on Friday as a Goldman Sachs analyst boosted the glass container company's rating and price target, citing a recent change to its capital allocation strategy.
THE SPARK: Alex Ovshey raised Owens-Illinois Inc. to "Buy" from "Neutral" and increased its 12-month price target to $28 from $20.
THE ANALYSIS: Ovshey said in a client note that Owens-Illinois Inc. said at a recent conference that it will use 90 percent of its free cash flow over the next two years to lower its debt. Previously, the company focused its efforts on mergers and acquisitions.
And while Owens-Illinois does face the prospect of weaker glass container volume in Europe, which continues to deal with unstable economic conditions, Ovshey says the worst volume declines for the region are likely already behind the company.
SHARE ACTION: Owens-Illinois' stock rose 93 cents, or 4.8 percent, to $20.29 in midday trading. The shares have traded in a 52-week range of $15.55 to $25.46. For the year to date, the stock is down 3 percent.