BofAmerica Securities analyst Andrew Obin maintained a Buy on Honeywell International (NASDAQ:HON) and increased the price target from $250 to $275 on Monday.
Obin noted Honeywell as a top pick heading into second-quarter 2025 earnings, with expectations for a beat-and-raise quarter that could push the stock higher. Despite multiple expansions, Honeywell shares continue to trade at a discount of approximately 12% on an EV/EBITDA basis relative to peers, suggesting room for further re-rating, as per the analyst.
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Notably, Honeywell entered 2025 with one of the most conservative earnings guides in the sector, forecasting a sharp slowdown in short-cycle segments during the second quarter and the second half of the year, he said. However, according to Obin, recent management conversations, updated macro indicators such as manufacturing PMIs and internal channel checks all point to resilience across key end markets.
The analyst noted the short-cycle collapse Honeywell anticipated is unlikely to materialize, adding that Honeywell is positioned to surprise to the upside in the second quarter and guide conservatively but positively for the third quarter. In his view, the company’s guidance remains too cautious in areas like Building Automation, where implied deceleration appears overly pessimistic, and Industrial Automation, which would require a significant macro deterioration to justify the current outlook.
Following Obin’s recent meeting with Honeywell at the Paris Air Show, the analyst came away with increased confidence in the company’s execution. He highlighted management’s broad confidence across verticals and confirmed they had implemented list price increases tied to general inflation rather than just tariff pass-throughs. He noted that development is incrementally positive and suggests stronger-than-expected pricing could support margins in upcoming quarters.
Obin’s model forecasts second-quarter earnings of $2.65 per share, within Honeywell’s guided range of $2.60–$2.70. This reflects +1.7% organic growth and 10 basis points of year-over-year margin contraction, mainly due to CAES integration in Aerospace.
For the third quarter, the analyst estimated $2.50 per share earnings, slightly below the $2.53 consensus. However, Honeywell issues a guidance range that brackets its internal estimates and Street expectations. Based on his conversations, the analyst does not believe management intends to guide in a way that lowers consensus.
While some investors have expressed concern over Honeywell’s muted sum-of-the-parts valuation, Obin noted the company’s second-quarter earnings report will act as a positive catalyst. Pricing dynamics, better-than-expected volumes, and the neutral-to-positive impact of tariffs should provide earnings momentum, even if the macro backdrop remains mixed, as per the analyst.
M&A activity under new CEO Vimal Kapur also deserves attention, he noted.
Honeywell closed several acquisitions while divesting its Safety/PP&E business. The analyst estimated these portfolio moves have structurally added about 70 basis points of growth to Honeywell’s total and 110 basis points to Honeywell Automation. While the benefits of these deals haven’t yet fully shown up in reported earnings, he expects the margin uplift and growth acceleration to become more visible as acquired businesses scale and normalize within the cycle.
Additionally, the company began 2025 with a record $35.8 billion backlog, up 11% year over year, which further increased to $36.1 billion in the first quarter, Obin noted. The analyst said performance obligations improved across all business segments from the fourth quarter to the first quarter, and backlog coverage rose in Industrial Automation while remaining stable elsewhere. All segments except Aerospace now show higher next 12-month backlog coverage versus a year ago, the analyst noted, indicating a solid foundation for forward revenue visibility.
Obin remained optimistic about Honeywell’s full-year outlook and noted the company’s upcoming second-quarter print as a key moment to reassert its position among industrial leaders.
The analyst concluded that the combination of conservative guidance, stronger pricing, improving volumes and strategic M&A suggests Honeywell is set up for positive estimate revisions and multiple expansion through the back half of 2025.
HON Price Action: Honeywell stock was trading higher by 1% to $238.42 at publication on Monday.
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