2023-06-01 21:45:20 ET
Johnson Controls International ( NYSE: JCI ) on Thursday was downgraded to Equal Weight from an investment rating of Overweight by analysts at Barclays Capital. They said the industrial conglomerate faces slowing growth with its high exposure to non-residential construction.
“The issue is that we think most non-residential buildings trends (especially the United States and Europe) are peaking or are already decelerating,” Julian Mitchell, analyst at Barclays, said in a June 1 report. “As this slowdown gathers steam into 2024, we think this will make it harder for Johnson Controls ( JCI ) to ‘work’ as a stock.”
Barclays also said Johnson Controls ( JCI ) is seeing less savings from a cost-reduction plan announced in 2021.
“The margin tailwinds from this program will likely ease into 2024+ ($340 million in savings for FY23 is the plan, and we estimate $45 million in 2024), which will weigh on margin and earnings growth,” according to the report.
Barclays kept its price target for Johnson Controls ( JCI ) of $70 a share, based on a price-to-earnings multiple of 18 times estimated EPS in 2024, and an enterprise value-to-EBITDA multiple of 13 times estimated EBITDA for 2024.
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Johnson Controls downgraded to Equal Weight at Barclays