United Technologies' Investments Are Paying Off, JPMorgan Says

(Bloomberg) -- United Technologies is starting to see the fruits of a multi-year investment period, according to JPMorgan, which wrote that the investments were “now driving top tier, visible organic growth” following a period of “underwhelming results and relative underperformance.”

The firm has an overweight rating and $132 price target on the stock; it previously had a not-rated designation due to a period of restriction. In December 2017, prior to the restriction, it rated United Technologies neutral with a $120 target.

The company’s investment period is paying off with “a return to margin expansion” and improved earnings, analyst C. Stephen Tusa wrote to clients. He called the stock “a best in class franchise that is under-earnings vs. history and peers.”

Shares rose 0.8 percent in pre-market trading, on volume of about 2,200 shares.

In late January, United Technologies reported fourth-quarter results that surged past expectations. It also said the growing aviation market would fuel profit gains in 2019.

“Stubbornly weak FCF remains the key investment negative, though again this is all
about risk/reward, and we believe the stock screens better on almost all fronts vs. our favored pair on the other side of the trade,” wrote Tusa, referring to General Electric.

Currently, 14 analysts have a buy rating on United Technologies, according to Bloomberg data, while nine rate it a hold and zero have a sell rating. The average price target is about $140, which implies upside of about 11 percent from the company’s Thursday close.

Shares of United Technologies are up about 24 percent from a recent low in December.

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm

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