Analysts’ consensus

The number of analysts actively covering Honeywell (HON) stock fell from 21 analysts to 19 analysts since June 2017. Among the 19 analysts from different brokerage houses, 79% of the analysts recommended a “buy,” 21% recommended a “hold,” and none of the analysts recommended a “sell.”

Most Analysts Suggest a ‘Buy’ on Honeywell

Analysts’ consensus indicates that Honeywell’s 12-month target price is $144.22, which implies a potential return of 4.9% over the closing price of $137.42 as of August 15, 2017. Analysts increased Honeywell’s consensus target from $139.50 last month.

Why analysts recommend a “buy”

Honeywell posted strong 2Q17 earnings and reported EPS (earnings per share) of $1.80, which beat analysts’ estimate of $1.78. Honeywell raised the lower end of its EPS for fiscal 2017 to $7.0–$7.10 compared to the earlier guidance of $6.90–$7.10. As a result, most of the analysts have recommended the stock as a “buy.”

Target prices by individual brokerage firms

  • Morgan Stanley (MS) has raised its target price on Honeywell to $145.00, which implies a potential return of 5.5% over the closing price of $137.42 on August 15.
  • Credit Suisse (CS) increased its target price on Honeywell to $139, which implies a potential return of 1.10% from the closing price of $137.42 as of August 15, 2017.
  • Oppenheimer recommended a target price of $155 on Honeywell, which reflects a potential return of 12.80% over the closing price of $137.42 as of August 15, 2017.

Investors can hold Honeywell indirectly by investing in the PowerShares Aerospace & Defense Portfolio (PPA). PPA has invested 6.70% of its portfolio in Honeywell. The fund’s other top holdings include Boeing (BA) and Lockheed Martin (LMT) with weights of 7.70% and 7.0%, respectively, as of August 15, 2017.

In the next part, we’ll discuss Honeywell’s latest valuations compared to its peers.

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