Last Update 11 Dec 25

JCI: Future Returns Will Depend On Applied HVAC And Aftermarket Demand Momentum

Analysts have nudged our Johnson Controls International price target higher, reflecting Street moves from about $105 to $124, to a new range of $119 to $142, which highlights better than expected Q4 segment EBITA, broad based geographic momentum, and confidence in management's HVAC and aftermarket guidance.

Analyst Commentary

Street research following the Q4 print reflects a generally constructive stance on Johnson Controls International, with several firms lifting price targets in response to outperformance and improved confidence in the growth outlook.

Bullish Takeaways

Bullish analysts highlight the 3% segment EBITA beat versus consensus as evidence of strong execution, supporting a higher valuation range and validating recent operational initiatives.
Broad based geographic growth is viewed as de-risking the earnings profile, with diversified demand underpinning confidence in sustained revenue expansion and margin resilience.
Momentum in Applied HVAC and aftermarket is seen as a durable growth engine, providing higher quality, recurring revenue streams that justify premium multiples within the industrials peer set.
The raised upper bound of the price target range reflects increased conviction that management’s guidance is achievable, with upside potential if end market strength in data centers and critical infrastructure persists.

Bearish Takeaways

Bearish analysts maintain a more cautious stance despite higher price targets, suggesting that much of the near term EBITA outperformance may already be reflected in the current share price.
Neutral ratings tied to the mid range of the revised target spectrum imply concern that valuation is approaching fair value, limiting risk reward upside without further positive catalysts.
Mixed demand trends outside of higher growth pockets like data centers raise questions about the sustainability of current growth rates across all end markets.
Some caution remains around execution against guidance, with investors watching for potential volatility if macro conditions soften or if backlog conversion in non data center segments slows.

What's in the News

Alpha Modus Corp. has filed new patent infringement lawsuits against Johnson Controls and its Sensormatic unit, alleging unauthorized use of AI driven in store analytics technologies across multiple retail solutions (Key Developments).
Johnson Controls issued new guidance for fiscal 2026, targeting approximately 3% organic sales growth in the first quarter and mid single digit organic sales growth for the full year from continuing operations (Key Developments).
The company advanced its long running share repurchase program, buying back over 43 million shares for about $5.0 billion in the latest tranche, bringing total repurchases under the 2012 authorization to roughly 58% of shares for more than $23 billion (Key Developments).
Sensormatic Solutions introduced AI enabled Orbit AI sensors and Video AI cameras integrated with ShopperTrak Analytics to give retailers more precise shopper traffic and behavior insights for conversion, merchandising, and staffing decisions (Key Developments).
Johnson Controls expanded customer partnerships, including work with Nopetro Energy on a $50 million landfill gas to renewable natural gas facility in Florida and a broader managed critical event management services collaboration with Everbridge (Key Developments).

Valuation Changes

Fair Value: Unchanged at approximately $132 per share, indicating no revision to the intrinsic valuation despite recent estimate updates.
Discount Rate: Risen slightly from about 9.31% to 9.35%, which implies a modestly higher required return and marginally tighter valuation support.
Revenue Growth: Essentially unchanged at around 5.3% annually, signaling a stable view on Johnson Controls International's medium term top line trajectory.
Net Profit Margin: Stable at roughly 12.8%, reflecting no material shift in long term profitability assumptions.
Future P/E: Edged up slightly from about 23.9x to 24.0x, which suggests a marginally higher multiple embedded in forward earnings expectations.

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.What are the underlying business or industry changes driving this perspective?

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 Earnings and Revenue 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.

Have other thoughts on Johnson Controls International?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

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.

Data Center Momentum And Share Buybacks Will Fuel Sustained Market Confidence