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On Wednesday, JPMorgan increased its price target for Honeywell International shares, traded on (NASDAQ:HON), from $178.00 to $182.00, while maintaining a Neutral rating on the stock. Currently trading at $211.49, Honeywell’s stock sits well above JPMorgan’s target, though analyst targets range from $178 to $300. According to InvestingPro data, the company maintains a "GOOD" overall financial health score of 2.66 out of 5, with particularly strong marks in profitability. The firm’s analysts noted that Honeywell’s recent financial performance slightly exceeded expectations, primarily due to favorable timing in below-the-line items. They observed that the Aerospace Aftermarket (Aero AM) demand is holding up better than anticipated, and orders showed a solid increase at 3%. This performance contributes to Honeywell’s impressive track record, with InvestingPro data showing the company has maintained dividend payments for 41 consecutive years and raised dividends for 14 straight years. However, they also pointed out that short-cycle risks persist, with potential concerns related to oil and gas, channel dynamics in Building Automation (BA), and pricing in Aerospace Materials (AM).
According to JPMorgan analysts, while Honeywell’s first-quarter base is higher, the outlook for the rest of the year is adjusted downward to account for potential economic headwinds that have not yet materially impacted the company. This adjustment is balanced by factors such as pricing strategies, foreign exchange benefits, and a recently completed share buyback program. The term "contingency" was discussed, suggesting that the guidance provided by Honeywell might not be as conservative as it appears, given that a 1% cut to volume is offset by a 1% increase in price.
The report further addresses the cost side of Honeywell’s business, indicating that the company, like its peers, has not included potential domestic supplier-related price increases in its projections, instead relying mostly on surcharges. This reliance implies that some financial benefits could diminish if tariffs are removed.
Despite the price target increase and recognition of Honeywell’s solid execution, JPMorgan remains cautious about the stock’s valuation. The analysts argue that Honeywell’s free cash flow (FCF) yield and sum-of-the-parts (SOTP) valuation do not present an attractive investment case compared to other companies that might be better positioned to leverage macroeconomic changes. This aligns with InvestingPro’s analysis, which indicates the stock is currently fairly valued, with a high P/E ratio relative to near-term earnings growth and a PEG ratio of 8.42. For deeper insights into Honeywell’s valuation metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In conclusion, while JPMorgan has raised its price target for Honeywell based on updated estimates, the firm’s stance remains neutral, citing the stock’s unattractive SOTP and FCF yield despite today’s upside.
In other recent news, Honeywell International Inc. reported its first-quarter 2025 earnings, revealing an adjusted earnings per share (EPS) of $2.51, surpassing the forecasted $2.21. The company’s revenue reached $9.82 billion, slightly above the forecast of $9.6 billion. Honeywell’s organic sales grew by 4%, driven by strong performance in aerospace and building automation. The company announced plans for a strategic separation into three public entities, which it believes will unlock significant value for stakeholders. Honeywell has repurchased nearly $3 billion in shares year-to-date and continues to pursue acquisitions, including the recent acquisition of Sundyne. Analysts from Wolfe Research and JPMorgan have been inquiring about the company’s strategies to mitigate tariff impacts, with Honeywell expressing confidence in offsetting these costs through pricing adjustments and productivity improvements. The company projects full-year organic sales growth between 2% and 5%, with adjusted EPS expected to range from $10.2 to $10.5. Honeywell’s Aerospace segment led growth with a 9% increase in organic sales, while the commercial aftermarket posted a 15% rise.
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