HON Deep Dive — Standing Alone

研报英文原文证据摘录

HON Deep Dive — Standing Alone

TDA 17.6% 20.1% 21.6%

Building Automation sustained high-single-digit growth attractive. Supported Margin, %

by smart building (more connectivity) and infrastructure investment, Honeywell has

Adj. EPS $3.23 $4.05 $4.88

won share in fragmented markets and can continue to drive growth through R&D

and innovation. PA&T setting up to cycle. Management has been constructive on - Y/Y Growth 8.8% 25.3% 20.5%

backlog conversion in H2/26 and recent acquisitions have driven more wins/content FCF 5,174.00 4,971.31 6,743.11

opportunities across LNG. A chemical/refining catalyst cycle could drive meaningful Consensus Estimates

cash generation (a catalyst replacement for a larger facility could be $3-5 million). 2025A 2026E 2027E

Industrial Automation target seems more aggressive (mid-single-digit growth and

EPS $10.51 $11.47

500bps margin expansion) but would add some nice earnings leverage.

Valuation

Risk/reward makes sense. If Honeywell can execute on its strategy, we believe

2025A 2026E 2027Eshares could trade above 17x. A meaningful inflection in PA&T could provide some

earnings torque as we move into 2027. Industrial Automation targets are a little high P/E NM NM 45.5x

but could be attractive if achieved. A clean portfolio into 2027 could set up for mid- EV/EBITDA 27.3x 23.1x 20.5x

single-digit or higher organic growth and solid margin expansion. Building Automation FCF Yield (%) 7.4% 7.1% 9.6%

deceleration and/or an industrial slowdown would be a key risk for investors and drive QTR. Adj. EPS Q1 Q2 Q3 Q4

the multiple to 14-15x. Our target price is $253 (assuming 16.0x 2027E EBITDA of

2025A $0.59 $0.88 $0.84 $0.92

$5.6 billion). Please note, numbers are pro-forma.

2026E $0.98a $0.90 $1.02 $1.15

2027E $1.11 $1.23 $1.21 $1.34

Our Thesis