3 Reasons Barclays Is Still Overweight On Johnson Controls

On Friday December 11th Barclays issued a company note on Johnson Controls Inc.

amid concerns over poor operational performance and questionable top-line guidance for Building Efficiency. Barclays maintained their Overweight rating on Johnson Controls with a $52 price target. Brian Johnson, an analyst at Barclays, wrote, "JCI will benefit from a number of interesting self-help initiatives...while margins are below the peer group, trajectory is positive...Even after accounting for lower estimates, we find the stock has an overly depressed valuation...But the stock is likely dead money for the time being." Barclays identified 3 key reasons why they maintained their Overweight rating for Johnson Controls: 1. Margin expansion may be increased by unique initiatives, cost takeouts, and product improvement. 2. Johnson Controls' Power Solutions and Building Efficiency division has grown at 6 percent year over year and while margins are below their competitors they have been increasing consistently. 3. Johnson Controls looks attractively valued due to its expected growth potential and margin trajectory. With that in mind, the industrial company has underperforming free cash flow generation and share buybacks have been lower than expected. Barclays believes that there are few near-term catalysts at the moment and that investors may be better off waiting to buy the stock. Johnson Controls closed Thursday at $40.96, up 0.61 percent. Related Article: http://www.benzinga.com/analyst-ratings/analyst-color/15/12/6015440/this-firm-remains-a-long-term-buyer-of-johnson-controls