Honeywell announced a plan to split into three standalone companies focusing on aerospace, automation, and advanced materials. The move comes after the company reported better-than-expected quarterly results, with revenue increasing 6.9% year-over-year to $10.1 billion. However, investors sold down the stock by roughly 5.5%, citing a disappointing earnings forecast for 2025.
The breakup news appears to have been largely priced in by the market, according to analysts. The company’s plan is seen as a positive development for shareholders, who will benefit from each separate entity having a dedicated leadership team with defined strategic goals and priorities.
However, the market remains cautious about the timeline for the separation process, which is expected to take several years. The aerospace business is growing rapidly, but the industrial automation unit has struggled.
Despite concerns, Honeywell’s management has made efforts to reset expectations and prioritize shareholder value. The company’s new forecast for 2025 suggests a soft year ahead, with sales in the range of $39.6 billion to $40.6 billion.
Analysts have upgraded Honeywell to a buy-equivalent rating, citing potential buying opportunities at current prices. The company’s aerospace business is expected to drive growth, and segment margins are forecast to increase by 60 basis points to 100 basis points from last year.
Overall, while the market reaction has been cautious, the breakup news and improved Q4 earnings provide a positive outlook for Honeywell’s long-term prospects.
Source: https://www.cnbc.com/2025/02/06/were-updating-our-honeywell-rating-after-breakup-news-sensible-guide.html