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Johnson Controls Stock: Activist Investor Elliott Takes $1B Stake
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Johnson Controls Stock: Activist Investor Elliott Takes $1B Stake

Story Highlights

Elliott Investment Management has acquired a significant stake in Johnson Controls. JCI stock has underperformed the broader markets over the past year.

Free JCI Analysis

Elliott Investment Management, an activist hedge fund, took a significant stake in Johnson Controls International (NYSE:JCI), valued at over $1 billion, Bloomberg reported. This investment places Elliott among the company’s top 10 shareholders. 

Johnson Controls specializes in producing HVAC (Heating, Ventilation, and Air Conditioning) equipment for residential and commercial use, industrial refrigeration systems, fire detection and suppression solutions, and security systems.

JCI Stock Performance

While Elliott’s specific plans for its investment remain unclear, it may push for changes in the company’s executive leadership due to the stock’s underperformance over the past year. For instance, Johnson Controls stock is up about 12% in one year, underperforming the S&P 500’s (SPX) over 26% gain. 

Nonetheless, JCI is transforming its portfolio to become a pure-play provider of comprehensive solutions for commercial buildings. The company is allocating capital towards growth opportunities and is well-positioned to capitalize on data center demand with its advanced chiller technology. The demand for data centers is accelerating globally, providing significant opportunities for growth as it provides cooling solutions to top hyperscale customers. 

In the second quarter conference call, JCI’s management highlighted that sales to data centers in Fiscal 2023 reached about $2 billion. Also, there has been a surge in orders from data center customers in 2024, exceeding last year’s figures. It’s important to highlight that orders in the first half of 2024 have already surpassed those booked for the entire Fiscal year 2023. With orders growing, the company’s financials will likely accelerate, supporting its growth. 

Who Owns JCI Stock?

While Elliott Investment Management’s stake places it among the top 10 shareholders in the company, let’s leverage TipRanks’ ownership tool to see who owns JCI.

According to TipRanks’ ownership page, other institutional investors own 46.17% of JCI. They are followed by mutual funds, public companies and individual investors, and insiders at 39.07%, 13.04%, and 1.72%, respectively.

Analysts Are Cautiously Optimistic 

JCI is expected to benefit from higher demand from data center customers. However, Wall Street is cautiously optimistic about its prospects. It has six Buy, seven Hold, and one Sell recommendations for a Moderate Buy consensus rating. 

Analysts’ average price target on JCI stock is $66.77, implying 3.26% downside potential from current levels.

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