UBS reiterates Buy rating on Honeywell stock amid transformation plans

Investing.com - UBS has reiterated its Buy rating and $268.00 price target on Honeywell International (NASDAQ:HON) as the company undergoes a significant transformation. According to InvestingPro data, Honeywell currently trades near $213, with analysts’ targets ranging from $210 to $290, suggesting potential upside. The stock’s Fair Value analysis indicates it’s currently trading close to its intrinsic worth.

The firm views the Solstice initiative as the first step in a more dramatic transformation that will eventually result in Honeywell emerging as a pure-play building and industrial automation company with over $20 billion in revenue.

UBS expects Honeywell to spin off its Aerospace division around this time next year, completing the major restructuring of the company.

The research firm projects that the remaining company could grow more than 5% through the business cycle with margin expansion opportunities, particularly in Industrial Automation, potentially allowing for further valuation improvement.

UBS noted that Honeywell has underperformed broader industrial equities for many years, attributing much of this lag to the company’s conglomerate model, while suggesting the upcoming changes could help the stock keep pace with or even outperform industrial peers.

In other recent news, Honeywell announced that its quantum computing subsidiary, Quantinuum, has raised approximately $600 million in equity funding at a pre-money valuation of $10 billion. This capital influx included new investors such as Quanta Computer, NVIDIA’s venture capital arm NVentures, and QED Investors, alongside existing shareholders like JPMorgan Chase, Mitsui, and Amgen. Additionally, Honeywell’s spin-off unit, Solstice Advanced Materials, has priced a $1 billion private offering of senior notes due in 2033, marking a significant step toward the planned separation of the business. The notes will be issued at par with an interest rate of 5.625% per annum and are expected to close around September 30, 2025. Furthermore, Honeywell has signed a Memorandum of Understanding with Redwire Corporation to advance quantum-secured satellite communication systems. This partnership is part of a European Space Agency-backed initiative and aims to create a fully functional system by mid-2026. These developments highlight Honeywell’s strategic moves in the quantum technology and materials sectors.

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