Industrial giant Honeywell International (HON) has moved into 2026 with momentum, fueling investor enthusiasm with a bold strategic reset. The industrial titan is preparing for the long-awaited initial public offering (IPO) of its majority-owned quantum computing division, Quantinuum. It’s a move that comes as companies race to scale quantum computing to make breakthroughs in areas such as advanced materials and hydrogen fuel cell technology.
Meanwhile, Honeywell is moving forward with plans to split its Automation and Aerospace businesses into two separate public companies by the second half of 2026, a move aimed at sharpening focus and unlocking value. With its fundamentals holding firm and major value unlocking moves underway, does Honeywell deserve a spot in your portfolio right now?
Founded in 1906, Honeywell has grown from a small heating company to a global conglomerate. Today, the company is at the forefront of innovation and offers cutting-edge solutions in aerospace, industrial and building automation, energy transition and security technologies. Honeywell partners with organizations around the world to address some of the most complex challenges in automation, the future of aviation and sustainable energy.
Through its Aerospace Technologies, Building Automation, Process Automation and Technology (PA&T) and Industrial Automation segments, all powered by its advanced Honeywell Forge software, the company is driving smarter, safer and more sustainable industries for the future. Currently, with a market capitalization of approximately $139.3 billion, the company is off to a great start in 2026.
Honeywell wasted no time making its mark in 2026, surging more than 11% in just the first trading days of the year and easily leaving the broader S&P 500 Index ($SPX) in the dust, which gained a modest 1.4% over the same period. The stock hit a year-to-date (YTD) high of $220.63 on Jan. 16 and is still trading slightly below that high, indicating strong early momentum.
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Honeywell turned in an impressive performance in its third-quarter fiscal 2025 earnings report last October, delivering results that beat Wall Street expectations across the board. The industrial powerhouse posted total sales of $10.4 billion, up 7% year-on-year, with organic growth of 6%, comfortably beating analysts’ forecast of $10.1 billion. The strong performance was largely driven by outstanding performance in its Aerospace Technologies and Building Automation businesses.
Aerospace Technologies stole the show, racking up $4.51 billion in quarterly revenue, a solid 15% increase from a year ago, while organic sales increased 12%. Building automation also gained ground, generating $1.88 billion in revenue, an 8% year-over-year increase. Meanwhile, Energy and Sustainability Solutions maintained momentum with revenue increasing 11% to $1.74 billion, underscoring broad strength across Honeywell’s portfolio.
On the earnings front, Honeywell delivered adjusted EPS of $2.82, up 9% year over year and well above the consensus estimate of $2.56. The company ended the quarter with $12.9 billion in cash and cash equivalents, up from $10.6 billion at the end of December 2024. Free cash flow was $1.45 billion, down 16% from the year-ago period.
Looking ahead, Honeywell now expects full-year 2025 sales in the range of $40.7 billion to $40.9 billion, slightly below its previous forecast of $40.8 to $41.3 billion. Still, the company raised its outlook for organic sales growth to around 6%, up from the previous projection of 4-5%. The segment’s margin guidance was reduced slightly to 22.9%-23%, down from the previous range of 23%-23.2%.
At the same time, adjusted EPS guidance was raised to $10.60 – $10.70, up from the previous range of $10.45 – $10.65, implying a 7% to 8% increase from last year. All eyes are now on Honeywell’s fiscal 2025 fourth-quarter earnings, which will be released before the market opens on Thursday, January 29.
JPMorgan has recently become more bullish on Honeywell, upgrading the stock to “overweight” and saying the market is undervaluing it ahead of the company’s breakup. The bank is targeting improving core growth, a record order book and a strong order book, particularly in the aerospace sector, which should lead to improved earnings and margins in 2026. While costs related to the spin-off are creating some near-term noise, JPMorgan believes Honeywell is cleaning this up faster than expected.
Overall, Honeywell continues to gain favor with Wall Street and earned a consensus rating of “Moderate Buy” from analysts. Of the 24 analysts covering the stock, 11 recommend “Strong Buy”, one says “Moderate Buy”, 11 suggest “Hold” and only one advises “Moderate Sell”. The average price target of $236.09 implies an upside of around 9.8%, while the most bullish Street call of $266 points to potential gains of 23.68% from current levels.
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On the date of publication, Anushka Mukherji had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
