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Investing.com -- Bank of America (BofA) double-downgraded Honeywell to Underperform from Buy, warning that the company faces a difficult stretch of catalysts ahead of its Aerospace spin-off and continues to trail peers on growth.
Shares in the U.S. conglomerate fell 2.4% in premarket trading by 08:13 ET.
The bank said Honeywell’s portfolio reshaping has not translated into a stronger equity story, with neither the Solstice separation nor the appointment of a new Aerospace CEO driving the positive reaction investors had hoped for.
Analysts led by Andrew Obin said the company’s plan to split into Honeywell Aerospace and Honeywell Automation in the second half of 2026 improves operational focus, but the path to getting there offers little to re-rate the stock.
“History suggests simplification creates value. The spin creates more operational focus. But the catalyst path is challenging,” the analysts wrote.
The team also highlighted that the “Solstice spin and Aerospace CEO have not matched our/investor expectations,” adding that the lack of EPS growth in 2026 leaves shares without a near-term catalyst.
BofA cut its price target to $205 from $265.
Growth remains the central pressure point. Analysts said Honeywell’s earnings trajectory has lagged peers despite deploying about $11 billion on acquisitions since 2023.
UOP, a key contributor at roughly 9% of expected 2026 sales, has underperformed, and even after adjusting for the Solstice divestiture, the analysts see Honeywell delivering around 7% year-on-year growth in 2026 versus peers at 13% and the broader sector at 10%.
The bank now expects 2026 EPS of $10.61, modestly below consensus.
Margin performance has also deteriorated. Honeywell once held a clear lead over multi-industrial peers, but EBITDA margins peaked in 2023 and have since slipped below sector averages.
BofA attributed much of the compression to weaker Aerospace, Industrial Automation and Energy & Sustainability Solutions profitability, noting that reinvestment, portfolio churn and lumpy end-markets are limiting improvement even as contract repricing aids 2026 and 2027.
The Solstice spin has yet to unlock value, with the new company trading near 7.5 times EV/EBITDA and Honeywell shares continuing to de-rate.
BofA also noted that investors were hoping for more transformative leadership in Aerospace. While the choice of Jim Currier and Craig Arnold is seen as steady, the bank said the board “is comfortable with a steadier strategy,” implying limited upside before the separation.
Honeywell still trades at a discount to its sum-of-the-parts, and analysts acknowledged that the breakup could unlock value over time. But with the market rewarding growth more than margins and Honeywell set to post below-peer EPS gains in both 2026 and 2027, they believe the stock will continue to lag.