Johnson Controls cut at at RBS on 'underwhelming' growth, cash generation

|About: Johnson Controls Internatio... (JCI)|By:, SA News Editor

Johnson Controls (JCI -1.1%) is lower after RBC Capital downgrades shares to Underperform from Sector Perform with a $37 price target, cut from $31, noting the company's "persistently underwhelming" growth and cash generation and highly cyclical business.

JCI's recent comments revealed Q2 softness in its Power Solutions unit and could create incremental risk to 2018 cash flow targets, RBC says.

JCI is exploring strategic alternatives for Power Solutions, but RBC thinks a divestiture is unlikely to unlock meaningful upside since "in our view, there are few natural buyers for a capital intensive automotive battery business tied predominantly to [internal combustion engines]."

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