3 Pivotal Questions For Honeywell Management

UBS ANALYSTS, Shannon O'Callaghan, and Christopher Belfiore, posed three pivotal questions for Honeywell International Inc (NYSE: HON). The brokerage has a Neutral rating and a price tag of $115.00, up from its earlier target of $105.00, on the shares of the company.The first question posed by the two analysts were can Honeywell continue to fuel margin enhancement? In the last more than a decade, its transformation has been a standout in the multi-industry sector while the operational processes and disciplines ensure it still happen and delivering gains. The pressure is on including the impacts of ACS and PMT divisions, which, would ease. Therefore, the two analysts think that the company could continue to expand its margins as restricting gains will flow.The second is in respect of whether the company could hit the targeted 4 – 5% organic growth in 2017. According to the brokerage, the company laid out its plan for a 4 – 6% organic growth CAGR between the years 2014 and 2018. However, it has been disappointing in 2014 and 2015 with 1 – 2% in 2016. O'Callaghan, and Belfiore expects the year 2017 would be ‘show-me story'. They expect more evidence of the company delivering before believing it. The third one related to whether free cash flow conversion reach 100% in 2017. The company's non-cash ongoing pension income grew to $600 million or ~8 percent of EPS, which, the analysts think, restricts PE valuation. The company has a target of reaching 100% free cash flow by next year. However, the brokerage sees non-cash pension income as a significant barrier to overcome in closing the gap between net income and free cash flow.On Monday, the stock traded 0.39 percent higher.