HON: Breakup Phase Will Unlock Upside As Quantinuum Monetization Nears

Analysts have trimmed their average price target on Honeywell International by about $2, to roughly $239. This reflects modestly higher revenue growth assumptions but slightly lower fair value and profit margin expectations following recent model updates around the Solstice spin and Q3 results.

Analyst Commentary

Street research remains broadly constructive on Honeywell, with most recent notes highlighting upside from portfolio moves and execution improvements, even as some estimates and price targets are nudged lower to reflect the Solstice separation and updated Q3 assumptions.

Bullish Takeaways

• Bullish analysts see the company entering a breakup catalyst rich phase. The Solstice spin and portfolio simplification are viewed as creating a clearer roadmap to value unlock and supporting sum of the parts upside.
• Several notes point to solid Q3 performance and growing momentum across core segments. This supports confidence in management execution and underpins higher price targets in the mid 250s range.
• The recent Quantinuum fundraise at a higher valuation reinforces the perceived hidden value of Honeywell's strategic stakes and adds roughly mid single digit dollars per share to some sum of the parts frameworks.
• Stripping out Solstice is viewed as enhancing the quality and stability of the remaining industrial and automation earnings base. This could justify a premium multiple if execution stays on track.

Bearish Takeaways

• Bearish analysts are trimming price targets in the low to mid 240s range as they reset models for the loss of Solstice earnings. This modestly reduces near term EPS power and fair value estimates.
• Some caution that the timing and magnitude of value realization from Quantinuum is uncertain, with a potential IPO now seen slipping toward 2026. This delays monetization and may cap near term rerating.
• There is concern that guidance updates to account for fewer months of Solstice contribution and balance sheet payment transfers could create short term noise around reported growth and margins.
• A subset of more cautious views emphasizes that, despite portfolio catalysts, execution still needs to remain consistently strong across all segments to justify current premium valuation levels.

What's in the News

• Honeywell introduced new Biocrude Upgrading technology that converts agricultural and forestry waste into lower carbon marine fuel, gasoline and sustainable aviation fuel, targeting hard to abate sectors such as shipping and aviation (Key Developments).
• The company formed a global strategic collaboration with LS ELECTRIC to co develop integrated power management and building automation solutions for data centers, including AI driven power monitoring and modular battery energy storage systems (Key Developments).
• Honeywell and Digimarc partnered to embed a new digital security layer into Honeywell handheld retail scanners to automatically detect tampered gift cards at the point of sale, aiming to reduce rapidly growing gift card fraud worldwide (Key Developments).
• Honeywell updated its 2025 guidance, slightly lowering the sales outlook to a range of $40.7 billion to $40.9 billion and setting diluted EPS expectations at $10.60 to $10.70 (Key Developments).
• Families of victims of Air India Flight 171 filed a product defect and negligence lawsuit alleging Honeywell designed a faulty fuel cutoff switch installed on the Boeing 787 8 Dreamliner, claiming it enabled unintended fuel cutoff that contributed to the fatal crash (Key Developments).

Valuation Changes

• The fair value estimate has fallen slightly, from about $241.67 to roughly $239.40 per share.
• The discount rate has edged down marginally, from about 8.02 percent to approximately 8.01 percent, implying a slightly lower required return assumption.
• Revenue growth has risen modestly, from roughly 2.71 percent to about 2.72 percent, reflecting a small upgrade to top line expectations.
• The net profit margin has slipped slightly, from around 16.35 percent to about 16.34 percent, indicating a minor compression in margin assumptions.
• The future P/E has decreased modestly, from roughly 25.0x to about 24.7x, signaling a slightly lower valuation multiple applied to forward earnings.