On Thursday, RBC Capital adjusted its price target for Johnson Controls (NYSE:JCI) International plc (NYSE: JCI), increasing it to $61 from the previous $54 while maintaining an Underperform rating on the stock. The firm cited a modest operating beat and an expanded backlog, alongside significant company announcements.
The company reported a slight 6 cents per share, or 4%, operating earnings beat compared to the consensus. Additionally, Johnson Controls has refined its fiscal 2024 guidance, keeping the midpoint unchanged. Notably, the company's backlog grew by 10%, reaching $12.9 billion.
These financial updates were accompanied by news that CEO George Oliver is set to retire. The company has initiated the search for a new CEO, and Oliver has committed to remain as Chairman during the transition period. This leadership change is occurring as Johnson Controls nearly completes its pivot towards commercial building solutions, with only 10% of proforma revenues now considered noncore.
Furthermore, the company announced that Patrick Decker, the former CEO of Xylem (NYSE:XYL), has been appointed to its Board of Directors. Despite these positive developments, RBC Capital holds the view that the risk/reward balance for Johnson Controls is unfavorable as the company goes through this period of transition, noted an analyst from RBC.
Johnson Controls reported an operating earnings beat and a 10% increase in its backlog, reaching $12.9 billion. The company also refined its fiscal 2024 guidance, while RBC Capital adjusted its price target for the company from $54 to $61.
Recently Oppenheimer also updated its rating on Johnson, maintaining an outperform rating and raising its price target to $79. The firm highlighted the company's successful transition into a technology-led solutions and services platform.
Johnson Controls recently reported a solid financial performance for the third quarter of 2024, with an organic sales growth of 3% and a segment margin of 17.9%. The company is also focusing on becoming a pure-play provider for commercial building solutions, particularly data centers, and has announced the divestiture of its Residential and Light Commercial HVAC and Air Distribution Technologies businesses.
InvestingPro Insights
As Johnson Controls International plc (NYSE:JCI) navigates a period of transition, including a CEO change and a refined focus on commercial building solutions, real-time data and insights from InvestingPro offer a broader perspective on the company's financial health and market performance. With a market capitalization of $47.79 billion, Johnson Controls operates with a moderate level of debt and maintains a Price/Earnings (P/E) ratio of 28.97, indicating investors' expectations for future earnings growth. Notably, the company has seen a strong return over the last three months, with a 3-month price total return of 18.95%, reflecting positive market sentiment.
InvestingPro Tips highlight that Johnson Controls has raised its dividend for 3 consecutive years and has maintained dividend payments for 54 consecutive years, showcasing a commitment to returning value to shareholders. Moreover, 5 analysts have revised their earnings upwards for the upcoming period, suggesting a favorable outlook on the company's financial performance. For investors seeking additional insights, there are 8 more InvestingPro Tips available, detailing aspects such as profitability predictions and market positioning within the Building Products industry.
These metrics and insights underscore the company's solid fundamentals and market confidence, which may interest investors despite the cautious stance taken by RBC Capital. For a deeper dive into Johnson Controls' prospects and performance, additional InvestingPro Tips can be explored at https://www.investing.com/pro/JCI.
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