Johnson Controls stock target raised to $96 by Oppenheimer

Thursday, Oppenheimer increased its price target on Johnson Controls (NYSE:JCI) to $96 from $90, while maintaining an Outperform rating on the company’s shares. The stock, currently trading near its 52-week high of $91.14, has delivered impressive returns with a 40.27% gain over the past year and 14.22% year-to-date. The adjustment followed Johnson Controls’ successful second fiscal quarter, where it surpassed consensus expectations for both revenue and earnings. Additionally, the company elevated its adjusted earnings per share (EPS) guidance for fiscal year 2025 to a figure 1% higher than the market’s predictions. According to InvestingPro, Johnson Controls maintains a robust market capitalization of $59.25 billion and generated revenues of $23.17 billion in the last twelve months.

The new Chief Executive Officer, Joakim Weidemanis, provided insights that suggest there are numerous opportunities to enhance the company’s operational efficiency, growth, and profit margins. These areas of potential improvement are expected to serve as drivers for the company in the upcoming quarters. Johnson Controls’ robust backlog and the momentum within its Services division underscore the resilience and long-term prospects of the business, particularly in the applied commercial heating, ventilation, and air conditioning (CHVAC) sector, which is seeing widespread growth, including in the data center market. InvestingPro data reveals the company’s strong financial health with a "GOOD" overall score of 2.59, supported by its moderate debt levels and consistent dividend payments for 55 consecutive years.

In a statement, the Oppenheimer analyst noted the company’s raised free cash flow (FCF) conversion guidance to 100%, indicating improvements in working capital management. While the management team cautiously refrained from projecting a consistent 100% FCF conversion rate for future years, the fiscal year 2025 guidance is viewed as a significant benchmark for enhancing the quality of earnings.

In light of these developments, Oppenheimer has revised its earnings estimates upward for Johnson Controls, leading to the increase in the price target to $96. This new target reflects the firm’s confidence in the company’s financial performance and strategic direction under its new leadership.

In other recent news, Johnson Controls International reported stronger-than-expected second-quarter earnings, highlighting a positive performance. The company achieved adjusted earnings per share of $0.82, surpassing analyst expectations of $0.79. Revenue for the quarter grew by 1% year-over-year to $5.68 billion, exceeding the consensus estimate of $5.64 billion. Organic sales saw a significant increase of 7% compared to the same period last year. Johnson Controls has also raised its full-year earnings per share outlook to approximately $3.60, above the previous guidance and Wall Street’s consensus of $3.56. Despite projecting lower third-quarter EPS than analysts’ expectations, the company reported robust order growth, with total orders rising 5% organically year-over-year. The Building Solutions backlog reached $14.0 billion, marking a 12% organic increase from the previous year. Sustained demand for building efficiency and sustainability solutions continues to drive the company’s growth.

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