UBS analyst Amit Mehrotra upgraded the rating on Johnson Controls (JCI – Research Report) to a Buy yesterday, setting a price target of $103.00.
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Amit Mehrotra has given his Buy rating due to a combination of factors that indicate a positive outlook for Johnson Controls. The appointment of an external CEO, Joakim Weidemanis, who has a track record of improving operating margins, suggests potential for significant profit enhancement. Mehrotra acknowledges the challenges ahead, such as the need for structural changes, but believes recent strategic divestitures and new leadership will facilitate more tangible progress.
Additionally, Johnson Controls’ advantageous market position supports the possibility of sustained revenue growth exceeding 5% annually. The company’s commercial HVAC segment is expected to grow at a 7.5% compound annual growth rate, backed by strong order trends and an increased backlog. The simplification of operations post-divestiture is anticipated to improve coordination and increase service revenue penetration, ultimately leading to higher profitability. Moreover, enhancing service attachment rates could leverage the existing cost structure for substantial profit gains, placing the company in a stronger competitive position against peers.
According to TipRanks, Mehrotra is a 4-star analyst with an average return of 6.1% and a 51.69% success rate. Mehrotra covers the Industrials sector, focusing on stocks such as 3M, Dover, and Eaton.
In another report released on February 6, J.P. Morgan also maintained a Buy rating on the stock with a $100.00 price target.