The analysts covering Johnson Controls International plc (NYSE:JCI) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the latest downgrade, the current consensus, from the ten analysts covering Johnson Controls International, is for revenues of US$24b in 2025, which would reflect an uneasy 9.7% reduction in Johnson Controls International's sales over the past 12 months. Per-share earnings are expected to bounce 50% to US$3.65. Before this latest update, the analysts had been forecasting revenues of US$29b and earnings per share (EPS) of US$4.18 in 2025. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a real cut to earnings per share numbers as well.

Analysts made no major changes to their price target of US$80.87, suggesting the downgrades are not expected to have a long-term impact on Johnson Controls International's valuation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 7.9% annualised revenue decline to the end of 2025. That is a notable change from historical growth of 3.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.3% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Johnson Controls International is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Johnson Controls International's revenues are expected to grow slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Johnson Controls International after the downgrade.

There might be good reason for analyst bearishness towards Johnson Controls International, like recent substantial insider selling. Learn more, and discover the 3 other risks we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.