Honeywell International (HON) is the worst-performing Dow Jones stock Thursday after the multinational conglomerate announced its intention to split into three companies: Honeywell Automation, Honeywell Aerospace and Advanced Materials.
"The formation of three independent, industry-leading companies builds on the powerful foundation we have created, positioning each to pursue tailored growth strategies, and unlock significant value for shareholders and customers," said Honeywell CEO Vimal Kapur in a statement.
The announcement comes less than three months after activist investor Elliott Investment Management built a stake worth more than $5 billion in Honeywell, with the goal of pushing for a breakup of the company.
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"The enhanced focus, alignment, and strategic agility enabled by this separation will allow Honeywell to realize the opportunity for operational improvement and valuation upside," said Elliott Partner Marc Steinberg and Managing Partner Jesse Cohn. "We look forward to continuing to support Vimal and the management team as they execute on the separation and deliver significant long-term value to Honeywell's shareholders."
The transaction is subject to certain customary conditions, including regulatory clearance, Honeywell said. If all goes as planned, the company expects the separation to be completed in the second half of 2026.
Honeywell's Q4 results top expectations
Honeywell also reported its fourth-quarter results this morning. In the three months ending December 31, its revenue increased 6.9% year over year to $10.1 billion, while its earnings per share declined 8.2% from the year-ago period to $2.46.
"We delivered a strong end to a successful year, exceeding the high end of our guidance for fourth-quarter sales and adjusted earnings per share while navigating a dynamic operating environment," Kapur said.
The results beat analysts' expectations. Wall Street was anticipating revenue of $9.8 billion and earnings of $2.32 per share, according to MarketWatch.
For all of 2025, Honeywell said it expects to achieve revenue in the range of $39.6 billion to $40.6 billion and earnings between $10.10 to $10.50 per share. The midpoints of these ranges, revenue of $40.1 billion and earnings of $10.30 per share, came up short of the $41.3 billion in revenue and earnings of $10.91 per share that Wall Street is calling for.
Is HON stock a buy, sell or hold?
Honeywell has lagged the broader market over the past 12 months, up roughly 18% on a total return basis (price change plus dividends) vs the S&P 500's 24% gain. Yet Wall Street remains bullish on the industrial stock.
According to S&P Global Market Intelligence, the average analyst target price for HON stock is $244.72, representing implied upside of more than 16% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm CFRA Research maintained its Buy rating on the blue chip stock following the earnings release.
"Shares are moving lower today on softer-than-anticipated 2025 guidance," says CFRA Research analyst Jonathan Sakraida. "We believe that HON may be leaning toward a cautious outlook given uncertainties surrounding potential tariffs and interest rates."
Sakreida adds that the separation of businesses will unlock value for shareholders "via a simplified operating structure and optimized capital allocation alignment."
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