Honeywell to provide UOP Russell equipment to Cardinal Midstream III
On March 13, 2018, Honeywell (HON) announced that it would be providing UOP Russell’s modular cryogenic equipment to Cardinal Midstream III. HON will customize the equipment to suit the client’s requirements. A plant will be developed at Iron Horse Gas Processing Complex in Grandy County, Oklahoma, to process 200 million standard cubic feet per day of natural gas.
Honeywell didn’t disclose the financial aspects of the deal. Craig Ranta, HON’s UOP Russell business director, said, “Cardinal chose to go with Honeywell due to our proven approach to gas processing solutions that increase yields of high-value natural gas liquids (NGLs). We’re delivering a customized plant to match the rich feed gas composition in the basin, while the high NGL recovery helps Cardinal be more competitive in capturing contracts from producers.”
Honeywell’s UOP business continues its organic growth with new deals. In 4Q17, it grew 12% and helped the Performance Materials and Technologies segment post revenue of $2.5 billion, implying a 12% growth year-over-year. The trend could continue in the upcoming quarters.
HON stock update
HON stock fell 1.6% and closed at $151.78 for the week ended March 16, 2018. As a result, HON traded marginally below its 100-day moving average of $152.26. On a year-to-date basis, the stock has fallen 1.3%. Analysts have recommended a target price of $173.50, implying a return potential of 14.3% over the closing price on March 16, 2018. HON’s peers United Technologies (UTX), 3M (MMM), and Boeing (BA) have risen 0.6%, 0.8%, and 12.1%, respectively, year-to-date.
Investors can indirectly hold HON by investing in the PowerShares Aerospace & Defense ETF (PPA), which invests 6.5% of its holdings in Honeywell as of March 16, 2018.