Morgan Stanley Sees Capital Allocation Strategy as Critical to Performance for Honeywell International

In a report published Thursday, Morgan Stanley analyst Nigel Coe reiterated an Overweight rating and $99.00 price target on

. In the report, Morgan Stanley noted, “HON ranks attractively in our structural margin expansion analysis, given continued HOS implementation (only 50% of plants at Bronze), while 2011 actions likely provide $175m (16c, 50bps) payback in 2012 and $150m in 2013. HON is well on track to achieve its $41-45bn revenue target and 16-18% margin rang by 2014. Additionally, we see the opportunity for HON to further expand margins by 2-3ppts beyond 2014, driven by continued roll-out of HOS and above-average employee productivity. HON's ROIC and earnings volatility are already at premier levels vs. peers. We see potential for multiple re-rating as market becomes more comfortable with 2014 targets.” Honeywell International closed on Wednesday at $93.86.