On Monday, UBS analyst Amit Mehrotra upgraded Johnson Controls International plc (NYSE:JCI) stock from Neutral to Buy, setting a new price target of $103, up from the previous target of $90. This adjustment indicates a potential 20% increase from the stock's current trading level of $87.65. The stock is trading near its 52-week high of $88.90, having delivered an impressive 61% return over the past year. According to InvestingPro data, 11 analysts have recently revised their earnings estimates upward, with price targets ranging from $79 to $105.
Mehrotra expressed confidence in the company's new CEO, Joakim Weidemanis, citing his successful track record at Danaher's Diagnostics business, where he achieved a 600 basis point improvement in operating margin between 2020 and 2024. The analyst believes that Weidemanis' experience will contribute positively to Johnson Controls' profit improvement potential. The company, currently valued at $57.86 billion, has maintained a gross profit margin of 35.5% and generated $2.06 billion in levered free cash flow over the last twelve months.
The upgrade is based on the premise that Johnson Controls is poised for tangible progress due to recent strategic divestitures and leadership changes. UBS anticipates that the company's earnings per share (EPS) could reach $6 by fiscal year 2028, which represents a compound annual growth rate (CAGR) of approximately 20% from the forecasted EPS for fiscal year 2025. Currently trading at a P/E ratio of 41.15, InvestingPro analysis suggests the stock is trading above its Fair Value. Discover more insights and 12 additional ProTips about Johnson Controls in the comprehensive Pro Research Report.
The UBS analyst's projection of $6 EPS by FY28 is 6% higher than the consensus estimate and reflects optimism about the company's direction under Weidemanis. The detailed financial analysis by UBS suggests that the new leadership could significantly impact the company's earnings and margin improvement.
Mehrotra's analysis underscores the potential for Johnson Controls to enact structural changes necessary to enhance its margins. The firm's positive outlook on the stock is rooted in the belief that the company's strategic decisions and new management will drive meaningful financial improvements over the next few years.
In other recent news, Johnson Controls has seen a flurry of significant developments. The company named Joakim Weidemanis as its new CEO, effective March 12, 2025. Weidemanis, with his extensive experience from Danaher Corporation (NYSE:DHR) and a track record of scaling global businesses, is set to guide Johnson Controls into its next growth phase.
On the financial front, the company reported its fiscal first quarter 2025 earnings results and provided financial guidance for the second quarter and the full year 2025. However, Melius analysts have downgraded Johnson Controls stock from Buy to Hold, with concerns over future price-to-earnings ratios despite no worries about the company's earnings results for 2025 or 2026.
In other organizational changes, Johnson Controls announced significant shifts in its executive team, aiming to streamline operations and promote growth. Julie Brandt has been appointed as Vice President and President of Global Field Operations, while Nathan Manning will now serve as Vice President and President of Building Solutions North America.
Additionally, Simone Menne, a board member of Johnson Controls, has decided not to seek re-election and is set to retire following the company's annual general meeting on March 12, 2025. The company clarified that Menne's decision was personal and not due to any disagreements with the company's operations, policies, or practices.
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