Last Update09 Oct 25Fair value Increased 1.23%
Analysts have modestly increased their price target for Johnson Controls International to approximately $114.95 from $113.55, citing anticipated gains in data center demand and a favorable sector outlook.
Analyst Commentary
Recent updates from Wall Street reflect a cautiously optimistic sentiment toward Johnson Controls International. Analysts have revised price targets upward, pointing to both sector tailwinds and company-specific dynamics influencing their perspectives.
Bullish Takeaways- Bullish analysts highlight accelerating demand in the data center space, which is expected to support sustained revenue growth for Johnson Controls.
- There is confidence in the company’s execution and its ability to benefit from favorable industry trends, particularly within industrial and conglomerate segments.
- Recent valuation increases are viewed as justified, with expectations that future positive earnings revisions could drive further equity upside.
- Several analysts anticipate that upcoming earnings reports will be solid, with the potential for management to slightly raise their 2025 outlooks.
- Some market observers maintain a neutral stance, citing mixed demand trends in areas outside of data centers, which could temper overall growth momentum.
- While price targets have been raised, not all analysts are convinced of significant near-term upside, suggesting the need for ongoing strong execution to meet elevated expectations.
- There is concern that the valuation re-rating may already reflect much of the anticipated good news, possibly limiting the stock’s further appreciation until additional catalysts emerge.
What's in the News
- Alpha Modus Corp. has filed new patent infringement lawsuits against Johnson Controls International in the U.S. District Court for the Eastern District of Texas, alleging unauthorized use of patented AI-driven retail analytics technologies. This marks an escalation in legal battles around in-store analytics systems (Lawsuits & Legal Issues).
- Johnson Controls and Everbridge, Inc. have announced an expanded collaboration to launch new managed Critical Event Management (CEM) services. The initiative will leverage AI-powered risk scoring and 24/7 support for resilience and risk reduction in enterprise environments (Client Announcements).
- The board of directors increased Johnson Controls' quarterly dividend to $0.40 per share, marking a $0.03 increase. The company has maintained a record of dividend payments since 1887 (Dividend Increases).
- Johnson Controls has introduced the Silent-Aire Coolant Distribution Unit platform, expanding data center thermal management capabilities to facilitate a transition to liquid cooling and improve energy efficiency for AI-powered data centers (Product-Related Announcements).
- The company repurchased nearly 3.8 million shares in Q2 2025, bringing total buybacks to over 396 million shares since 2012. This represents more than half of all outstanding shares (Buyback Tranche Update).
Valuation Changes
- The consensus analyst price target has risen slightly from $113.55 to approximately $114.95.
- The discount rate edged up modestly from 9.08% to 9.10%.
- The revenue growth estimate ticked down marginally from 5.09% to 5.09%.
- The net profit margin decreased fractionally from 12.24% to 12.20%.
- The future P/E multiple increased slightly from 28.0x to 28.4x.
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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