Johnson Controls initiated with an Overweight at Morgan Stanley

Morgan Stanley initiated coverage of Johnson Controls with an Overweight rating and $85 price target. The firm started the multi-industry sector with an Attractive view. The firm says that with “megatrends” and inflated cost profiles “sharpening the focus” on efficiency, it sees U.S. industrial growth returning to 300 basis points above gross domestic product. After the post-COVID disruptions and higher inflation, companies are “more focused than ever” on resiliency and efficiency, contends the analyst tells investors in a research note. As multi-decade industrial headwinds ease, a sector re-rating should follow, the firm adds. Morgan Stanley’s preferred names are Trane Technologies (TT), Eaton (ETN) and Rockwell Automation (ROK). Its Underweight ratings are on 3M (MMM) and Emerson (EMR). The firm prefers “capex-levered efficiency providers” who are levered into emerging megatrends and sees downside to organic growth for the 3M and Emerson.