Last Update23 Oct 25Fair value Increased 2.56%
The average analyst price target for Johnson Controls International has increased from $114.95 to $117.89. This reflects growing optimism about the company's outlook as analysts cite improving demand in select segments and recently positive valuation trends.
Analyst Commentary
Recent changes in analyst coverage for Johnson Controls International reflect a dynamic outlook, with both optimism and caution shaping near-term expectations. Price targets have been revised upward as analysts weigh growth prospects, execution risks, and sector trends.
Bullish Takeaways
- Bullish analysts see accelerated growth in certain end markets, particularly driven by strong data center demand. This demand is expected to outpace other segments.
- Recent valuation re-rating is viewed as well justified. Additional equity upside may be supported by further positive earnings revisions.
- Analysts highlight improving sentiment around execution, supported by evidence of operational momentum and positive outlooks for select business lines.
- Rising price targets suggest confidence in management's ability to capitalize on improving demand and deliver sustainable earnings growth.
Bearish Takeaways
- Some bearish analysts maintain a more neutral stance, citing mixed demand trends across certain segments outside of data centers.
- There is caution around the potential for bifurcation in results. Some end-markets may lag even as others outperform.
- Macro uncertainty and variability in industrial activity could weigh on broad-based growth and temper further valuation expansion.
What's in the News
- Alpha Modus Corp. has initiated new patent infringement lawsuits against Johnson Controls International PLC and Sensormatic Electronics LLC, alleging unauthorized use of AI-powered retail analytics technologies in products deployed for major retailers. (Key Developments)
- Johnson Controls and Everbridge, Inc. have expanded their partnership to introduce a portfolio of managed critical event management (CEM) services. This offering integrates advanced AI models to help organizations enhance resilience and operational risk management. (Key Developments)
- The board of directors approved a quarterly dividend increase to $0.40 per share. This continues a consecutive annual dividend payout streak since 1887. The new dividend is payable in October 2025. (Key Developments)
- Johnson Controls launched the Silent-Aire Coolant Distribution Unit platform, which brings scalable liquid cooling solutions to data centers aiming to support higher rack densities and improve facility energy efficiency. (Key Developments)
- The company repurchased nearly 3.8 million shares during the second quarter of 2025, completing over 51% of its ongoing buyback program valued at more than $18.1 billion. (Key Developments)
Valuation Changes
- Consensus Analyst Price Target has increased from $114.95 to $117.89, reflecting a modest uptick in market expectations.
- Discount Rate has decreased slightly from 9.10% to 9.09%, indicating a minimal reduction in perceived risk.
- Revenue Growth projection has declined from 5.09% to 4.87%, indicating a small downward adjustment to the growth outlook.
- Net Profit Margin estimate edged down from 12.20% to 12.04%, suggesting a marginal tightening of profitability assumptions.
- Future P/E ratio has risen from 28.43x to 29.71x, which points to a higher market valuation relative to forward earnings.
Key Takeaways
- The new organizational model and Lean practices are expected to drive revenue growth and enhance net margins significantly.
- Strong demand in key platforms and expanded service capabilities will contribute to more predictable revenue and higher margins.
- Operational complexity and restructuring may hinder revenue and margin improvements, while market pressures and execution risks threaten growth potential.
Catalysts
About Johnson Controls International- Engages in engineering, manufacturing, commissioning, and retrofitting building products and systems in the United States, Europe, the Asia Pacific, and internationally.
- Johnson Controls is expected to benefit from its new organizational model that aims to improve customer focus and operational execution, which should enhance revenue growth and net margin expansion.
- The company has significant opportunities for cost reductions and process improvements through the implementation of Lean practices, likely positively impacting net margins and overall earnings.
- Johnson Controls’ strong record backlog and sustained demand in key areas, such as its York HVAC and Metasys building automation platforms, provide a solid foundation for future revenue growth.
- The focus on expanding service capabilities and improving service attachment rates is likely to drive higher recurring revenue, thereby contributing to more predictable revenue streams and potentially higher margins.
- Strategic pricing actions and improvements in supply chain inefficiencies are anticipated to mitigate tariff impacts and drive margin improvement, supporting overall earnings growth.
Johnson Controls International Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Johnson Controls International's revenue will grow by 4.9% annually over the next 3 years.
- Analysts assume that profit margins will increase from 8.5% today to 12.4% in 3 years time.
- Analysts expect earnings to reach $3.3 billion (and earnings per share of $5.56) by about September 2028, up from $2.0 billion today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 27.7x on those 2028 earnings, down from 35.0x today. This future PE is greater than the current PE for the US Building industry at 23.0x.
- Analysts expect the number of shares outstanding to decline by 1.18% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 9.08%, as per the Simply Wall St company report.
Johnson Controls International Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The company's operational and innovation execution is hindered by complexities in current product offerings, SKU numbers, and operating methods, which could slow improvements in revenue and net margins.
- The recent restructuring into three geographical customer-oriented reporting segments could initially create disruptions and transitional challenges, affecting short-term earnings.
- The reliance on capturing pricing adjustments and executing Lean principles to offset tariff impacts and boost margins has significant execution risks, which could lead to disappointing margin improvements if not well executed.
- While there is potential in the data center market, the introduction of new competitors and changes in technology can add pressure on market share and revenue from this sector.
- Integration and successful expansion of service attachment rates are necessary for margin improvement, and failure to achieve this could limit growth in net margins and earnings.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $112.85 for Johnson Controls International based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $132.0, and the most bearish reporting a price target of just $79.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $27.0 billion, earnings will come to $3.3 billion, and it would be trading on a PE ratio of 27.7x, assuming you use a discount rate of 9.1%.
- Given the current share price of $106.29, the analyst price target of $112.85 is 5.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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