Market Overview

4 Catalysts To Drive EPS Growth For Johnson Controls

Share:
4 Catalysts To Drive EPS Growth For Johnson Controls

In a research report released on Monday, Goldman Sachs outlined four catalysts that could drive earnings per share growth at Johnson Controls International plc Ordinary Share (NYSE: JCI). The firm initiated coverage of the company at Buy with a 12-month price target of $46.

Analyst Joe Ritchie mentioned differentiated organic growth, synergies, improving free cash flow and attractive valuation as the four catalysts.

The analyst estimates 2017/2018 organic growth of 3–4 percent, above the 1–2 percent average run rate for his coverage universe. According to the analyst, the exposure of the company is more nuanced than just auto/non-residential, as new construction represents less than 25 percent of non-residential activity and its battery business is tied to a secular shift from traditional lead acid to AGMs.

Related Link: Cramer Gives His Opinion On Johnson Controls, ConforMI, Zimmer Biomet, SemGroup And T. Rowe Price

Goldman said its analysis of industrial deal implies average cost efficiency of about 6–7 percent. The firm noted that about 3/4th of its incremental EBIT through 2019 is driven by operational improvements, with organic growth contributing very little.

The firm commended the improvement in free cash flow, even as the metric is not as strong as its peers. Despite investor concerns on peaking non-residential construction and auto cycle weighing on the shares of the company, Goldman believes the strong EBIT growth and improving returns warrant a higher multiple.

At last check, Johnson Controls was up 1.23 percent at $44.60.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for JCI

DateFirmActionFromTo
Nov 2020Morgan StanleyMaintainsEqual-Weight
Nov 2020Deutsche BankMaintainsBuy
Nov 2020Credit SuisseMaintainsOutperform

View More Analyst Ratings for JCI
View the Latest Analyst Ratings

 

Related Articles (JCI)

View Comments and Join the Discussion!

Posted-In: Goldman SachsAnalyst Color Long Ideas Price Target Initiation Analyst Ratings Movers Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
HYMCBMO CapitalInitiates Coverage On
DEMorgan StanleyMaintains335.0
SBNYRaymond JamesMaintains138.0
CORTHC Wainwright & Co.Maintains32.0
CYBBFCitigroupDowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com