Last Update 06 Dec 25

Fair value Decreased 0.94%

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.

Honeywell's separation into three entities can unlock value, positioning each for long-term growth with positive revenue and margin impact.
Strategic acquisitions and growth in high-potential verticals like LNG and data centers are set to enhance revenue, margins, and operational stability.
Economic uncertainties, geopolitical risks, and execution challenges from strategic changes may pressure Honeywell's revenues, profit margins, and growth expectations.

Catalysts

About Honeywell International

Engages in the aerospace technologies, industrial automation, building automation, and energy and sustainable solutions businesses in the United States, Europe, and internationally.What are the underlying business or industry changes driving this perspective?

Honeywell's decision to separate into three independent companies (Automation, Aerospace, and Advanced Materials) could unlock significant value and better position each entity for long-term growth, impacting revenue and margins positively.
The acquisition of Sundyne and strategic bolt-on acquisitions are expected to enhance Honeywell's business profile, increasing both organic growth and segment margins by expanding their portfolio of solutions.
Honeywell's ongoing commitment to a local-for-local strategy is likely to mitigate international trade tensions and tariff impacts, providing stability to revenue and protecting net margins through operational efficiencies.
The company's focus on growing high-growth verticals such as LNG, data centers, and specialty chemicals, coupled with productivity improvements, should drive revenue growth and improve overall segment margins.
Honeywell's continued share repurchase plans offer an opportunity for EPS growth, as repurchasing stock at what they consider attractive levels would reduce the number of shares outstanding, potentially boosting earnings per share.

Honeywell International Earnings and Revenue Growth

Honeywell International Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Honeywell International's revenue will grow by 4.6% annually over the next 3 years.
Analysts assume that profit margins will increase from 14.3% today to 16.4% in 3 years time.
Analysts expect earnings to reach $7.5 billion (and earnings per share of $12.23) by about September 2028, up from $5.7 billion today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 25.0x on those 2028 earnings, up from 23.8x today. This future PE is greater than the current PE for the US Industrials industry at 7.0x.
Analysts expect the number of shares outstanding to decline by 2.36% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.93%, as per the Simply Wall St company report.

Honeywell International Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The increasingly uncertain economic climate, compounded by shifting global trade patterns and rising tariffs, could negatively impact Honeywell's future revenues and profit margins, raising caution about end-market demand.
The planned separation into three standalone public companies carries execution risks, including potential stranded costs and one-time expenses, which could affect net margins and earnings.
Industrial Automation's exposure to China and reported sales decline due to lower demand, especially in Europe and personal protective equipment, suggests vulnerability to geopolitical instability, impacting revenue and growth prospects.
The pressure from acquisition integration costs and mix adjustments in Aerospace Technologies indicates potential margin contraction, which could limit expected earnings growth.
A prudent guidance posture due to geopolitical uncertainties and potential demand weakness implies Honeywell's financial expectations might not be fully met if global economic conditions worsen, impacting revenue and profit targets.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $252.97 for Honeywell International based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $290.0, and the most bearish reporting a price target of just $210.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $45.8 billion, earnings will come to $7.5 billion, and it would be trading on a PE ratio of 25.0x, assuming you use a discount rate of 7.9%.
Given the current share price of $214.2, the analyst price target of $252.97 is 15.3% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Separation Will Refocus Operations and Unlock Pathways for Long-Term Upside