Recent Weakness In Honeywell Shares Offers Buying Opportunity

Although shares of Honeywell International Inc. HON have underperformed the market and industry ETFs over the past year, the company’s “long-term record is sterling, with 5- and 10-year outperformance against the market and the industry, Argus’s John Eade said in a report.

Honeywell’s shares have gained 7.8 percent in the past quarter, broadly in-line with the S&P 500. However, over the past year, the company’s shares have underperformed, appreciating only 14 percent, versus an 18 percent gain in the S&P 500.

Eade maintains a Buy rating on Honeywell, with a target price of $135. He stated that the company’s shares appeared “attractively valued” at current prices.

Bright Prospects

Eade believes Honeywell is poised to generate “low double-digit earnings growth over the next five years.” The company could continue to benefit from its diverse product lines and relatively low exposure to US defense spending. Honeywell also has a strong presence in the commercial aerospace and construction markets, which should support earnings growth.

“In China, the company is selling “mid-market” products that are growing despite the infrastructure slowdown,” the analyst wrote.

While Honeywell has a robust balance sheet, management has a history of double-digit dividend hikes, Eade mentioned.