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Bank of America Securities analyst Andrew Obin downgraded Honeywell International Inc. (NASDAQ:HON) from Buy to Underperform and lowered the price forecast from $265 to $205.
The analyst notes that the company is reorganizing its portfolio, including a planned split into Honeywell Aerospace and Honeywell Automation in the second half of 2026.
While such simplifications historically create value and bring greater operational focus, the path to realizing this catalyst appears challenging, adds the analyst.
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Obin says that the Solstice spin and the current Aerospace CEO have fallen short of their own and investors' expectations, as some anticipated an external CEO hire.
Honeywell's EPS growth continues to lag peers, projected at ~7% y/y in 2026E versus 13% for peers, adds the analyst.
Also, the analyst writes that EBITDA margins peaked at 25.9% in 2023 but fell to 25.0% in 2025E, slightly below peers at 25.2%, with Aerospace contributing most to the decline.
While contract repricing may help in 2026/2027, ongoing R&D and reinvestment are likely to constrain margin expansion, adds the analyst.
The analyst slashed EPS estimates to $10.61 (from $10.92) for 2026 and $11.48 (from $11.66) for 2027.
Last month, Honeywell reported third-quarter 2025 adjusted earnings of $2.82 per share, topping analysts' estimates of $2.57 and revenue of $10.41 billion, beating expectations of $10.14 billion.
Honeywell raised its 2025 adjusted EPS guidance to $10.60 – $10.70 from $10.45 – $10.65, versus the consensus of $10.54.
However, the company lowered its full-year sales outlook to $40.7 billion-$40.9 billion, from $40.8 billion-$41.3 billion, versus a consensus of $40.84 billion.
Price Action: HON shares are down 1.91% at $192.37 at the last check on Tuesday.
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