Morgan Stanley Reiterates Overweight on Johnson Controls

Morgan Stanley is out with its report today on Johnson Controls JCI, reiterating Overweight. In a note to clients, Morgan Stanley writes, "JCI remains our top supplier pick and one of the most powerful secular stories in the group. The strong revenue beat in 3Q and 4Q guidance reinforces JCI's ability to grow faster than the industry and we expect margins to expand 250 bp by 2013 as well. We expect JCI to generate $10 bn (almost 40% of m.cap) in FCF between 2012-15. With the stock trading at 10.7x 2012 P/E, well below historical 13-15x, we would look to accumulate at these levels." Shares of JCI closed Wednesday at $39.69, down 4.38% from Tuesday's close.