Argus: Honeywell Has Upside, Will Make More Strategic Acquisitions

• Honeywell International Inc. HON shares have appreciated 13.91 percent over the past three months, rising to $104.96 on December 23.
• Argus’ John Eade has maintained a Buy rating and price target of $118 on the company.
• Honeywell’s stock has appreciated over 9 percent over the past quarter, as compared to the 5 percent increase in both the S&P 500 and the Industrial ETF. Eade expects this momentum to continue.

According to the Argus report, “Management recently met with the Street, and forecast another year of solid growth in 2016.” The company had raised its dividend by 15 percent in October.

Analyst John Eade expects the company to continue to benefit from “its diverse product lines and relatively low exposure to U.S. defense spending, as well as from its strong presence in the commercial aerospace market.”

Honeywell’s rapidly growing Turbo motors business is also expected to benefit from the increasing demand for fuel efficiency.

In addition, the company’s balance sheet continues to be strong, and it has a history of dividend hikes in the double digits.

“During the recent 3Q selloff, HON became more aggressive with its share buyback program, another sign that management is confident in its outlook,” Eade mentioned.

Management expects to keep the share count mostly flat in 2016, although Honeywell’s EPS could receive a boost if share buybacks are stepped up. The company might also look at M&A activity as an alternative means for cash.

“Honeywell has announced $5.5 billion in deals, and has a “robust” pipeline across its three segments,” the report added.