Guidance Lowered
Analyst Julian Mitchell noted that the company released a swathe of information Thursday after the market close, including a $0.03–$0.08 operating earnings miss, a re-segmentation, a potential Q4 re-financing and an accounting charge. Based on the company's announcement, the analyst said the earnings per share guidance for 2016 is now at $6.60–$6.64 compared to $6.60–$6.70 previously. However, the company is comfortable with the 2017 consensus forecast that calls for double-digit earnings growth.
Growth Prospects Hurting?
Credit Suisse expressed concerns about the company's inability to meet sales forecast, which is currently being offset by additional restructuring and headcount reductions. The firm believes the earnings outperformance despite the sales shortfall may have come at the expense of future growth.
Discount In Valuation Closing In
The firm believes the company is losing share in aerospace, with organic sales growth at this segment now about 1 percent compared to peer group growth of 4+ percent. The firm is of the view that the disconnect between aerospace pure plays, which had de-rated, and other companies with large aerospace exposure, which had seen their valuation multiple re-rate, would begin to close.
Credit Suisse has a Neutral rating on the shares of the company.
At time of writing, Honeywell shares were down 7.72 percent at $106.69.
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