Monday, April 26, 2010

Al Gore, No Score! "Johnson Control Upgrading to Outperform – Well Positioned for Cyclical Recovery - Baird" (JCI)

Mr. Gore's Generation Investment Management held a pretty big chunk of JCI through the downturn but apparently sold the last 1,810,352 shares during the fourth quarter. Here's G.I.M.'s most recent 13F. For comparison purposes here's the Nov. 10 filing.
In pre-market action the stock is up $0.87 at $35.37.
From Notable Calls:
Baird is upgrading Johnson Control (NYSE:JCI) to Outperform from Neutral while raising their price target to $42 (prev. $33). Firm says JCI could be a $60 stock in 3-4 yrs time.

Firm notes that while they have been chasing the stock higher in recent months, it has outperformed the market by only 3% since its last earnings report and has been lagging the industrials sector of the S&P 500. This is one of the best business models in the automotive space with a well-diversified revenue steam across end markets and geographic regions. With automotive now less than one-half of revenue and one-fourth of profits, investors have increasingly viewed and valued the stock as an industrial.

The catalysts behind their upgrade are:

Rapid Profit Recovery: The company’s second fiscal quarter (March) was a record for any second quarter. Contributing to this was strong recovery in revenue, up 32%, driven by Interior Experience and Power Solutions along with parts of Building Efficiency (residential and Global Workplace Solutions). Additionally, margin recovery was significant driven by cost-cutting, volume and equity income from China in Interior Experience along with volume and productivity in Power Solutions and Building Efficiency.

Strong Growth in China: Strong economic activity in China is driving strong results across all business units; most of these investments are in minority-owned joint ventures with the profit growth most visible in the equity income line. Interior Experience is benefiting from the strong automotive demand and dominant market share. Power Solutions has a leading share of the OEM battery market and emerging end market demand bringing more advanced battery technology to this market. The Building Efficiency business is also well positioned....MORE

...Notablecalls: Nice call, my only question is - will Baird have the power to move the stock? JCI traded 11 million shares on Friday.

Otherwise the chart looks good, close to breaking to new highs.

$35.50 is the line in the sand. It will get there but will it be surpassed?