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Johnson Controls Upgraded On These 2 September Catalysts

A couple of catalysts upcoming in September should result in a rebound in Johnson Controls Inc’s JCI share price performance by yearend, Credit Suisse’s Julian Mitchell said in a report. He maintained an Outperform rating and a $52 target price for the company, while adding the stock to the U.S. Focus List.

Johnson Controls’ share price has reached $52-$53 several times in recent years, and the upcoming catalysts could drive the stock towards that range, analyst Mitchell commented.

September Catalysts

Mitchell mentioned the following company-specific catalysts that could drive Johnson Controls’ stock:

  • Closing of the Tyco Deal: The merger between Johnson Controls and Tyco could close on September 2. Shareholders of both companies approved the merger on August 17.

“We think the closing of the deal will focus investor attention on the prospects for the combined entity in 2017+. This should be positive, as we expect JCI to grow earnings at a double-digit pace for several years, against single-digit growth for the EE/MI peer average,” the analyst wrote.

  • Adient Analyst Meeting: The meeting is scheduled for September 15. A key reason for the recent pressure on Johnson Controls’ shares has been the negative investor sentiment towards the Automotive sector as well as the lackluster performance of the Adient / Auto Experience segment in the June quarter.

“We think the Adient analyst meeting could serve to somewhat reverse the very low expectations in the investment community, as it will help provide clarity around its future strategy, and details on how it will aim to re-take market share,” Mitchell stated.

The analyst added that Johnson Controls is currently among the “very few 'cheap'” EE/MI stocks remaining, following the sector’s rally year-to-date.

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Aug 2016Credit SuisseMaintainsOutperform
Aug 2016Credit SuisseMaintainsOutperform
Aug 2016Morgan StanleyMaintainsOverweight

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