Johnson Controls International (JCI) has the potential to deliver 70% earnings upside in the next three years, UBS said in a note to clients emailed Tuesday.

The investment firm said the earnings potential is "driven by structural self-help, margin catch-up, and robust capital returns."

The capital returns include last week's $9 billion hike to the company's share buyback authorization, of which about $5 billion will likely be deployed in the next three to six months, the note said.

UBS said its "constructive view" of the company is backed by a "structural margin improvement opportunity, catalyzed by the company's new leadership."

Johnson Controls' operating margin is roughly 40% below that of Trane Technologies -- the company's closest commercial peer in the HVAC space -- which implies a "40% earnings uplift just to reach peer-level profitability-before factoring in revenue growth," the note said.

The investment firm added, however, that it sees "few, if any, synergies" between Johnson Controls' three business segments: Fire, Security and HVAC.

UBS sees a "meaningful opportunity to simply the business and focus the investment case on commercial HVAC, where the mega theme of energy efficiency/sustainability can allow for meaningful outgrowth."

UBS has a buy rating on Johnson Controls and a $116 price target.

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