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Investing.com - Oppenheimer upgraded Resideo Technologies (NYSE:REZI) from Perform to Outperform on Wednesday, setting a price target of $35.00 following the company’s settlement agreement with Honeywell (NASDAQ:HON). The stock, currently trading at $28.48 and near its 52-week high, has shown strong momentum with a 9.5% return over the past year.
The upgrade comes after Resideo Technologies and Honeywell agreed to resolve a financial obligation that has affected Resideo since its 2018 spin-off from Honeywell. Under the new agreement, Resideo will make a one-time payment of $1.59 billion in the third quarter of 2025, eliminating its previous commitment to pay Honeywell $140 million annually for the next 18 years.
Oppenheimer noted the settlement represents approximately a 6% internal rate of return and will remove a significant $140 million annual drag on Resideo’s EBITDA. The firm views this development as "highly positive" for Resideo’s financial outlook.
The agreement also paves the way for Resideo to spin off its ADI distribution business by the second half of 2026, which Oppenheimer characterized as a "very high-quality" operation.
Oppenheimer indicated it now feels comfortable applying a higher sum-of-the-parts valuation to Resideo, as the planned spin-off makes this analysis "no longer theoretical."
In other recent news, Resideo Technologies reported impressive financial results for the first quarter of 2025, significantly surpassing earnings expectations. The company announced an adjusted earnings per share (EPS) of $0.63, which greatly exceeded the projected $0.28. Revenue for the quarter reached $1.77 billion, slightly above the anticipated $1.75 billion. These results reflect strong performance and have garnered positive attention from investors. Additionally, Resideo Technologies appointed Jeffrey Kutz as Senior Vice President and Chief Accounting Officer. Mr. Kutz previously held the position of Vice President, Chief Accounting Officer at Quaker Chemical (NYSE:KWR) Corporation. His extensive experience in financial roles at Air Products and Chemicals (NYSE:APD), Inc. positions him well for his new responsibilities at Resideo. These developments mark a period of significant activity for the company.
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