A Fresh Look at Honeywell (HON) Valuation Following AI Collaboration With TotalEnergies

Honeywell International (HON) is teaming up with TotalEnergies to pilot its AI-driven Experion Operations Assistant at the Port Arthur Refinery in Texas. This collaboration highlights Honeywell's efforts to advance industrial automation and predictive operations.

See our latest analysis for Honeywell International.

Honeywell’s tie-up with TotalEnergies comes as the company looks to re-energize momentum after a challenging stretch for its shares. Honeywell’s stock closed at $200.41, with its 1-year total shareholder return at -7.2% as operational innovation ramps up and market sentiment begins to stabilize. While long-term investors have still seen positive total returns over three and five years, the recent softness suggests the market is waiting for clearer signs of renewed growth and reduced risk.

If Honeywell’s push into AI-driven operations has you interested in big-picture opportunities, it’s a great moment to explore fast growing stocks with high insider ownership.

With shares still well below the average analyst price targets and early success from new technology, investors are left to wonder: is Honeywell an undervalued opportunity, or has the market already factored in its future potential?

Most Popular Narrative: 18.4% Undervalued

With Honeywell's last close at $200.41 and the most popular narrative assigning a fair value near $246, there is a meaningful gap that has market-watchers asking what underpins such optimism in the face of recent setbacks. The stage is set for a potentially transformative period, driven by break-up plans and bold strategic pivots.

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.

Read the complete narrative.

Want to know the quantitative drivers propelling that much higher fair value? The narrative hinges on ambitious forecasts, especially for earnings expansion and elevated future multiples. There is a profit growth storyline here that could surprise even experienced analysts. Curious to see exactly what powers that price target? Dive into the full narrative for the full reveal.

Result: Fair Value of $245.60 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, headwinds remain, as uncertainty from the planned business separations and mixed demand from key markets could quickly challenge Honeywell’s bullish scenario.

Find out about the key risks to this Honeywell International narrative.

Build Your Own Honeywell International Narrative

If the prevailing narrative doesn't quite align with your take, you can easily craft your own story by exploring the data in just a few minutes. Do it your way

A great starting point for your Honeywell International research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

Looking for More Investment Ideas?

Don’t let opportunity pass you by. Take your portfolio to the next level with unique strategies designed for forward-thinking investors just like you.

• Fuel your portfolio’s growth and uncover the financial strength of companies by starting with these 872 undervalued stocks based on cash flows.
• Catch the wave in healthcare innovation when you check out these 32 healthcare AI stocks, shaping tomorrow’s medical breakthroughs.
• Lock in reliable income streams and stability with these 15 dividend stocks with yields > 3%, boasting attractive yields above 3%.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com