Johnson Controls International (JCI) reported "encouraging" fiscal Q4 results, with solid order growth, a rising backlog and higher profit leverage that prompted the company to issue fiscal 2026 guidance above Wall Street expectations, UBS Securities said in a report emailed Thursday.

Organic orders rose 6% in the latest quarter, accelerating from 2% growth in the prior period, while the company's backlog climbed 13% year over year on an "organic basis." JCI projected fiscal 2026 earnings of $4.55 per share, topping the $4.43 consensus estimate, and above its own prior-year trajectory, the report said.

The building technology and solutions company's management, which typically sets "conservative" guidance, had its fiscal 2025 results finished 9% ahead of initial guidance, UBS said.

The company also guided to 50% operating leverage for fiscal 2026, "double the company's prior algorithm" and a sign of stronger cost opportunity. Long-term leverage expectations were raised to 30% or higher, compared with at least 25% previously, the report said.

The improved outlook and efficiency gains should boost investor "confidence" that Johnson Controls' "earnings power" can grow into its valuation, UBS said.

UBS maintained a buy rating on Johnson Controls, with a price target of $124.

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