Stuck In A Bearish Trend, Johnson Controls Shares Would Look More Attractive In The Mid-$30s

Argus downgraded Johnson Controls International plc Ordinary Share (NYSE: JCI) to Hold from Buy, saying that the company’s top-line growth is proving more challenging than initially expected. In this scenario, the brokerage would become constructive on the stock only in the mid-30s.

“Currently, sales growth is a problem, and we suspect that challenges at the top line will prevent management from achieving earnings growth in the upper end of its wide range,” analyst John Eade wrote in a note.

Analyst's Commentary

Johnson Controls recently confirmed its 2017 guidance EPS forecast range of $2.60–$2.75, implying growth of 13–19 percent. Second-quarter EPS guidance calls for a range of $0.48–$0.50, in a seasonally slow quarter.

Based on the weaker-than-expected sales trends, Eade cut his fiscal year 2017 EPS estimate to $2.67 from $2.70.

Related Link: Biotech, Qualcomm, Twitter, Uranium: Fast Money Picks For February 14

On the technical front, the analyst noted that the shares appear in a bearish trend of lower highs and lower lows that date to September 2016. In mid-January, the 50-day trend line crossed through the 200-day trend line and is still pointing lower.

“We will look to get this well-managed company back on the BUY list should the shares fall back toward support in the mid-$30s,” Eade added.

At last check, shares of Johnson Controls fell 1.49 percent to $41.13.

Image Credit: By Zákupák - Own work, Public Domain, via Wikimedia Commons