Honeywell International (HON) is expected to outline a mid-single-digit organic growth framework, a stronger margin expansion story and additional value-creation opportunities tied to its planned breakup at its June 11 investor day, RBC Capital Markets said.
The brokerage said Honeywell is positioned for mid-single-digit organic growth, supported by demand from buildings, energy facilities and industrial facilities. The firm sees potential for double-digit earnings per share growth during the first two to three years after the separation, driven by revenue growth, annual margin expansion and lower stranded costs.
Industrial Automation could drive much of the margin improvement, with management likely to outline a path toward more than 20% earnings before interest, taxes, and amortization margins, according to the note.
Honeywell's Forge software platform could become a bigger growth driver as AI use expands, customer deployments rise, and more recurring software revenue develops, while the company will likely focus first on reducing debt after the separation, then move toward smaller acquisitions, mainly in sensing and measurement, the investment firm said.
RBC raised its price target for Honeywell to $275 from $268 and kept its outperform rating.
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