Welcome to Extreme Investor Network, where we provide you with unique and valuable insights into the world of investing. Today, we’re diving into the recent news surrounding Honeywell, as JPMorgan has made a significant move regarding the industrial manufacturer.
After 15 years of bullishness on Honeywell, JPMorgan has decided to take a step back and move to the sidelines. While the Wall Street bank downgraded the stock to a neutral rating from overweight, analysts led by Stephen Tusa did lift the price target to $235 from $225. This news may have left investors questioning the future of Honeywell and what it means for their portfolio.
Shares of Honeywell are up just 1% on the year, but according to Tusa’s updated price target, they stand to gain almost 10% over the next year. Despite this potential for growth, JPMorgan pointed out that Honeywell is currently trading at a 20% discount to its sector, which is significantly below its historical discount of 4%.
Tusa mentioned that Honeywell shares are cheap, but the planned divestitures by the company pose a short-term headwind. This move by the company may lack clarity on the forward earnings curve for the near future. However, Tusa did acknowledge Honeywell’s defensive growth profile, extended visibility from a long cycle backlog, and renewed focus on growth under a new CEO.
The planned spinoff of Honeywell’s Advanced Materials division was seen as a strategic move by Tusa. However, the spinoff also eliminates any sum-of-the-parts upside ahead for Honeywell. Management has indicated that there could be more dilutive deals on the horizon, which adds another layer of uncertainty for investors.
At Extreme Investor Network, we understand the importance of staying informed and making smart investment decisions. While the downgrade of Honeywell by JPMorgan may have raised some concerns, it’s crucial to assess the situation carefully and consider all factors before making any investment moves. Stay tuned for more updates and insights on the latest developments in the investment world.