UPDATE: Johnson Controls (JCI) PT Lowered to $71 at Morgan Stanley as Fixed Field Labor Increases the Earnings Volatility

Morgan Stanley analyst Joshua Pokrzywinski lowered the price target on Johnson Controls (NYSE: JCI) to $71.00 (from $82.00) noting that the company's cost base, particularly the field business, sees exaggerated fluctuations in volatility from supply chain misses due to the high overhead in field labor.

The analyst reiterated an Overweight rating, stating "While the extra absorption challenges on top of price/cost and throughput headwinds are worse than peers, we believe these will ultimately normalize. Pricing power or mechanisms are not the issue and we expect F4Q22 will be when investors start to appreciate the latent margin potential as supply chain issues are comp'd. Ultimately, we view the ~$4 FY23 target as still generally on the table (although likely a bit light) and expect continued order momentum and sequential margin improvement in the next 2 quarters to support that."

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