Thursday, April 26, 2007

Johnson Controls (NYSE:JCI): Added to America's Conviction Buy List at GSCO

- Goldman Sachs is adding Johnson Controls (NYSE:JCI) to their America's Conviction Buy List, spotlighting it as their best idea. Firm's 6-month DCF and multiples based price target for JCI shares is $115, implying about 12% upside. Firm expects strong revenue growth in the company's building efficiency segment to be the primary growth driver, followed by its best-in-class battery business. Margin expansion is expected to occur in all segments. Option value around the "green" theme lends support and offers potentially sizable longer-term upside, especially if building efficiency concerns become more widespread, as they expect they will.

Notablecalls: I highlighted JCI as a potential long already on Monday, after the stock broke to a new all-time high helped by stronger than expected Q1 results. JCI has a lot going for it (margin expansion, the green theme) and I expect GSCO's call to generate some further buy interest in the name today.

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