Honeywell stock saw unusually large moves on Friday.
David Williams/Bloomberg
Industrial giant Honeywell International has had a busy week: It announced a mask partnership with American rapper will.i.am and doubled down on its environmental goals. Investors, however, largely shrugged off that news. They were, however, paying attention to some bullish Wall Street calls on the stock Friday.
Honeywell International (ticker: HON) stock rose 2% in early trading to $224.23 after a couple of positive notes from the Street. The S&P 500 and Dow Jones Industrial Average, for comparison, are both up less than 0.3%.
Deutsche Bank analyst Nicole DeBlase upgraded Honeywell shares to Buy from Hold. Her price target goes to $244 from $222 a share. DeBlase sees the stock as being “best-in-class,” while offering investors leverage to the post-Covid economic reopening. Honeywell has a large commercial aerospace franchise. In addition, its building technology division will benefit from more people going back to the office.
J.P. Morgan analyst Stephen Tusa wrote about the company Friday, too. He already rates shares Buy, but increased his price target to $250 a share from $200. He put his thoughts in the form of an equation: “Synchronized late cycle recovery + margin upside + balance sheet = best mega-cap setup in 20 years.”
The best in 20 years is quite a claim. But the analyst sees the stars aligning, with a global economic recovery leading to better profitability. And a strong balance sheet means the company can either buy back stock or make acquisitions. Both those things can enhance shareholder returns in coming years.
These Wall Street reports are good news for bullish Honeywell investors. Even though a 2% move might not seem like much, Honeywell is a stable, diversified conglomerate. Gains like this happen only about 6% of the time for its shares. In comparison, shares of peer General Electric (GE) and Apple (AAPL), the most valuable U.S. company, see moves of 2% or higher nearly twice as often.
With the upgrade, now 60% of analysts covering Honeywell stock rate shares Buy. That is right in line with the average Buy-rating ratio for stocks in the Dow.
Barron’s wrote positively about Honeywell back in November 2019, before the pandemic, believing its software and data strategies would lead to faster growth and higher profit margins. Since then, the stock is up about 25%, essentially keeping up with the U.S. market.
Shares have done better lately, up about 31% over the past six months, rising with other aerospace stocks as Covid-19 vaccines have improved the outlook for commercial air travel. Aerospace is the Honeywell’s largest division.
Write to Al Root at [email protected]
