Bank of America lowered its rating on Johnson Controls International ( NYSE: JCI ) to Neutral from Buy.
Analyst Andrew Obin and team said they appreciate that long-term fundamentals for HVAC are strong, but said they are growing more cautious on the near-term outlook.
"We see the JCI story as combining self-help and structural outgrowth driven by smart buildings controls and software. However we see near-term risks from slowing nonresidential construction. While JCI shares trade at a discount to peers, we believe this reflects elevated execution risk."
BofA set a price objective of $72 on JCI based on 12X EV/EBITDA off the 2024 estimates. The 12X target multiple is noted to be below the peer group average trading at 14X on 2023 estimates, but the firm thinks the discount valuation is warranted given risk from slowdown in the non-res cycle.
Shares of JCI fell 1.65% in premarket action on Monday to $64.70.
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Johnson Controls slips after BofA turns cautious on 2023 setup