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Zacks Analyst Blog Highlights: Owens-Illinois, Silgan Holdings,

Avaya, Cisco and 3COM 
CHICAGO--(BUSINESS WIRE)--April 28, 2006 announces the list of stocks featured in the
Analyst Blog. Every day, the Zacks Equity Research analysts discuss
the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include: Owens-Illinois
(NYSE:OI), Silgan Holdings (Nasdaq:SLGN), Avaya (NYSE:AV), Cisco
(Nasdaq:CSCO) and 3COM (Nasdaq:COMS). 
See the latest posts to the Analyst Blog by visiting 
Here are highlights from Thursday's Analyst Blog: 
No Surprises from Bernanke 
Federal Reserve Chairman Ben Bernanke did not say anything
surprising in prepared remarks before the Joint Economic Committee.
Nor did he provide any meaningful insight as to whether rates would or
would not be raised at the June meeting. 
The Chairman provided an upbeat analysis and outlook of the
economy, though he warned about potential problems from rising energy
prices and tightening labor markets. He also told Congress to start
focusing on fiscal responsibility. Specifically, he stressed the
importance of finding a balance between tax policy and government
As for the elephant in the room - interest rates, Bernanke was
noncommittal: In the statement issued after its March meeting, the
FOMC noted that economic growth had rebounded strongly in the first
quarter but appeared likely to moderate to a more sustainable pace. It
further noted that a number of factors have contributed to the
stability in core inflation. However, the Committee also viewed the
possibility that core inflation might rise as a risk to the
achievement of its mandated objectives, and it judged that some
further policy firming may be needed to keep the risks to the
attainment of both sustainable economic growth and price stability
roughly in balance. In my view, data arriving since the meeting have
not materially changed that assessment of the risks. To support
continued healthy growth of the economy, vigilance in regard to
inflation is essential. 
In other words, interest rates may or may not be increased at the
June meeting. For those who had a preconceived notion of where rates
are headed, today's testimony did nothing to change their opinions. 
Owens-Illinois a Hold 
Owens-Illinois (NYSE:OI) reported first quarter EPS of $0.14,
below year-ago earnings of $0.37, on account of rising raw material
costs, escalating energy prices, and negative currency translation.
Regrettably, overhead and manufacturing costs are rising faster than
volume. We believe margin expansion depends on declining commodity
costs rather than price hikes. Until then, management will focus on
productivity enhancements, cost-savings measures, and price hikes. We
reiterate our Hold recommendation on shares of OI. 
The Glass Containers segment reported an operating profit of
$166.2 million in the first quarter of 2006, which was 17.8% lower
than the same year ago period. Price increases, productivity, and cost
savings failed to offset the rise in energy prices, raw materials
costs, and negative currency translation. The Plastics Packaging
segment reported an operating profit of $31.7 million in the first
quarter of 2006, compared with $30.9 million in the first quarter of
2005. This business is less energy intensive. Consequently, price and
productivity more than offset energy inflation--leading to $0.8
million increase in net earnings. 
We have valued Owens-Illinois on a P/E multiple basis. Currently,
the shares trade at 13.7x our 2006 EPS estimate of $1.25--a discount
to peers such as Silgan Holdings (Nasdaq:SLGN). Despite the valuation
discount, we believe OI has excellent long-term growth prospects due
to its strong industry leadership position and willingness to push
While first quarter results disappointed on debt reduction and
volume, we do anticipate a profit rebound in 2006 from continued cost
savings, productivity measures, higher pricing and lower commodity
costs. However, our valuation multiple remains conservative until
European and North America glass container volumes rebound and energy
costs subside. Our target price is $18.00, or 14.4x our forward EPS
Avaya Stays a Hold 
We are maintaining our Hold recommendation for Avaya (NYSE:AV), a
leading provider of IP telephony equipment for business and
enterprises. Following the release of mixed results for the fiscal
second quarter of 2006 (ended March), the company announced further
cost reduction initiatives and component supply issues that may impact
future sales levels in the near-term. The company also announced its
expectations for continued strength in the second-half of the fiscal
year, which is a typical seasonality factor. 
Avaya maintained its market leadership position as large business
customers migrate from traditional private branch exchanges (PBX's) to
IP-based phone systems. However, the competitive environment is
expected to remain challenging with Cisco (Nasdaq:CSCO) and 3COM
(Nasdaq:COMS) continuing to address the same customer base. 
Company shares are trading at 17.9x estimated earnings for fiscal
2006, or approximately 17.2x expected earnings before stock options
expenses. This represents a modest premium to the S&P 500, but a
discount to the telecom equipment industry. On the basis of enterprise
value (EV) to sales, AV is trading at 0.8x estimated 2006 sales, which
is below the industry median of 2.2x. Our $12.50 price target is based
on an EV/sales (2006) multiple of 1.0x. 
See the latest posts to the Analyst Blog by visiting 
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