Wolfe has upgraded Honeywell's rating following the spin-off of its aerospace business, estimating its division valuation at $293

LootboxPhobia · 2026-02-27T20:23:59+00:00

Wolfe Research upgrades Honeywell to Outperform, with a target price of $293, believing that the spin-off of the aerospace business will unlock value. The company's execution has improved, revenue growth outpaces peers, and potential additional value may come from quantum computing equity and pension surpluses. Although risks exist, the approaching spin-off improves the risk-reward ratio.

LootboxPhobia

2026-02-27 20:23:59

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Investing.com - Wolfe Research upgrades Honeywell’s rating from industry perform to outperform, citing improved execution and the upcoming spin-off of the aerospace business. The firm believes this could unlock approximately $293 per share in segment valuation.

The broker sets a target price of $293 by the end of 2026, implying about 22% upside. It raises its sum-of-the-parts valuation (SOTP) from $262 to $293 to reflect this year’s revaluation of aerospace and industrial peers, as well as greater confidence in profit margin expansion in 2027 and 2028.

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Wolfe states that the aerospace spin-off planned for early July is entering a time window when investors typically focus more on the value of the split. The firm believes that as the spin-off approaches, more value will be realized.

It also notes that under new management, execution has become stronger, with revenue growth exceeding that of electrical equipment and diversified industrial peers for seven consecutive quarters.

Growth is not limited to aerospace; early signs suggest investments in building automation could support high single-digit core growth across the remaining business portfolio.

Wolfe highlights other potential sources of value. The firm suggests Honeywell could monetize its stake in quantum computing company Quantinuum, estimated at about $12 per share. The company also has a $4.4 billion pension surplus, which could potentially add about $7 per share in equity value, though timing remains uncertain.

The firm acknowledges risks, including costs associated with the post-spin-off and the need for further streamlining of the RemainCo business focused on automation. It states that the stock continues to trade at a discount, reflecting these concerns, but believes that as the spin-off nears, the risk-reward ratio is becoming more favorable.

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