Johnson Controls International (JCI) is poised for tangible progress due to recent strategic divestitures and leadership changes, UBS Securities said in a report emailed Monday.

"We are positive on the appointment of a new, outsider CEO Joakim Weidemanis, who during his tenure as head of Danaher's Diagnostics business, oversaw 600 basis points of operating margin improvement during 2020-24," UBS said.

UBS estimates the company's earnings per share could reach $6 by 2028, 6% above consensus and reflecting a 20% compound annual growth rate from 2025, the report said.

"[W]e think the roadmap to higher profitability is more achievable post divestiture of the company's residential and light commercial HVAC businesses, with a simpler structure allowing for better coordination and higher penetration of higher-margin service revenue," UBS said.

The company's strong market position is expected to generate annual growth of over 5%, with robust expansion in its commercial heating, ventilation, and air conditioning segment and steady growth in fire and security. These projections are backed by positive order trends and a solid backlog, UBS said.

"Strong growth and focus on cost reduction should allow the company to achieve higher end of their 25%-30% incremental margin target over the next few years," it added.

UBS upgraded the Johnson Controls to buy from neutral and raised its price target to $103 from $90.

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