Johnson Controls, Flowserve both cut to Sell at Goldman
Seeking Alpha
Published Dec 08, 2017 03:48PM ET
Johnson Controls, Flowserve both cut to Sell at Goldman
- Johnson Control (JCI -0.1%) is downgraded to Sell from Neutral with a $35 price target at Goldman Sachs (NYSE:GS), which calls the stock a "potential value trap."
- Analyst Joe Ritchie says many of the issues which plagued JCI throughout 2017 likely will continue into 2018, including EPS growth that likely will trail its peers at 7% vs. an average of 11% for its peers, expectations for a 2.4% organic growth rate vs. a group average of 4%, a "subpar" free cash flow conversion, and below-average cash return on capital invested.
- The analyst says he would be more positive "if JCI improved its working capital metrics, organic growth accelerated (especially in buildings), higher cost-outs drove better incremental margins and/or JCI conducted accretive portfolio actions."
- Ritchie also downgrades Flowserve (FLS -1.3%) to Sell, citing concerns over free cash flow and his belief that consensus expectations are aggressive.
- Now read: Daily Insider Ratings Round Up 11/24/17: PSEC, JCI, BMRC
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