Honeywell International Inc. (NASDAQ: HON), is in the red after a report that the company was considering splitting into two publicly traded companies: one focusing on automation, and the other on aerospace and defence.
But famed investor Jim Cramer dubs the weakness in HON an opportunity as the Charlotte-headquartered firm seems to be moving in the right direction.
Elliott Investment Management has been pushing for the conglomerate since November to split into two independent companies to increase shareholder value.
The activist investor has over $5 billion in Honeywell stock.
Why has Honeywell’s stock recently dropped?
Jim Cramer attributes Honeywell International’s ongoing weakness to the company’s financials, which “have not been up-to-snuff.”
In its latest reported quarterly, the Nasdaq listed firm generated $9.728 trillion in sales – significantly lower than the $9.905 that experts had predicted.
Investors are also abandoning Honeywell’s stock because its management reduced the outlook for the full year in October.
The conglomerate expects to sell $38.7 Billion in total sales for the year, compared to $39.4 Billion it had previously guided for.
HON ceased its PPE business in the last year. In an effort to simplify its portfolio, HON recently decided to spin off its Advance Materials division as well.
Honeywell shares are still attractive to income investors despite the weakness. They pay a yield of 2,09% as at writing.
Why is Cramer bullish about HON’s possible breakup?
Jim Cramer suggests that investors load up on HON after reports of a possible breakup. Investors have been pleased with the split of General Electric, HON’s industrial peer.
GE’s transformation allowed each of its businesses, regardless of their size, to tap into specific growth strategies and improve its financial performance.
Cramer believes that, if done correctly, a split of Honeywell into two independent publicly traded companies would unlock significant value for Honeywell shareholders just as it did in 2024 for General Electric.
Honeywell may announce its intention to dissolve next month, according to people familiar with the situation.
Honeywell shares are they worth buying now?
Mad Money host is not the only one who remains bullish on Honeywell.
Citi analysts continue to grade HON as “buy” and see a potential upside of 23% from current levels.
Honeywell International is expected to report a fiscal fourth quarter that is in line with previous years, but the firm believes that earnings will improve in 2025.
Citi’s top industrial picks for 2025 are shares of the $141 billion company based in Charlotte, North Carolina.
Grandview Asset Management has also purchased 4,500 shares in Honeywell International for the final quarter 2024.
The firm spent just under $1 million on HON shares.
This post Honeywell split – could the breakup unlock more shareholder value? This post may be updated as new information unfolds
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