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Updates on Honeywell’s Spin-Off Progress

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Honeywell’s spin-off progress

Honeywell (HON) continued its progress on its earlier announced spin-offs. After leadership announcements, HON announced on June 14 that it would call its Transportation Systems segment “Garrett: Advancing Motion.” The spin-off of this division is expected to be completed by the end of the third quarter. Upon the completion of the spin-off, Garrett will be an independent publicly traded company. The spin-off could add more value to investors, as it will be an independent company.

The Garrett name relates to HON’s turbo origins in the 1950s. During that time, Cliff Garrett, an entrepreneur and an engineer, led the team to develop a turbocharger for the Caterpillar (CAT) D9 crawler tractor, which was launched in 1954. The Garrett name is currently used in the market in relation to upgrades of turbochargers for gasoline and diesel passenger and commercial vehicles.

Olivier Rabiller, president and CEO of Transportation systems, said, “There is a strong emotional attachment to the Garrett name, which has stood for pioneering turbo technology for more than 60 years and has made an indelible mark on the driving habits of millions of vehicle owners as well as the history of automotive engine performance. Moving forward, the Garrett name will continue to be synonymous with turbocharging technologies and also support the tangible progress and investments we have made in electric products, software and connected vehicles, and the future growth we see reshaping our industry.”

HON stock update

HON stock fell ~1.1% and closed at $150.23 for the week ended June 15. Despite a decline in the stock price, HON managed to trade marginally above its 100-day moving average price of $149.66. HON outperformed the PowerShares Aerospace and Defense ETF (PPA), which fell ~2.6% for the week. The fund invests 7.3% of its portfolio in Honeywell.

On a year-to-date basis, HON stock has fallen 2.0%. United Technologies (UTX) is down by 0.5%, while Boeing (BA) has gained 20.6%. However, analysts are bullish on the stock and have maintained a target price of $172.10, implying a return potential of 14.6% over its closing price on June 15.

HON’s 14-day relative strength index (or RSI) of 52 indicates that the stock is neither overbought nor oversold.

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