Honeywell Set To Soar? Analyst Says Smart Price Hikes, Solid Backlog, M&A Could Drive Big Gains

Zinger Key PointsHoneywell is a top BofA pick for Q2, with a beat-and-raise expected and stock still trading at a 12% discount to peers.Analyst sees margin upside from strong pricing, resilient end markets, and M&A gains not yet reflected in earnings.Up Next: Get 5 Dark Horse Stocks Wall Street Is Quietly Loading Up OnBofAmerica Securities analystAndrew Obinmaintained a BuyonHoneywell InternationalHONand 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.Also Read:Honeywell, Near Earth Autonomy Test Pilot-Free Helicopter For Faster, Safer Marine SupplyNotably, 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.Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100.Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get StartedM&A activity under new CEOVimal Kapuralso 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.Loading...Loading...Read Next:Honeywell, ITT, Eaton See Bright Outlook As BofA Securities Cites Military Spending, Aftermarket GrowthPhoto: Piotr Swat via ShutterstockHONHoneywell International Inc$238.381.04%Stock Score Locked: Edge Members OnlyBenzinga Rankings give you vital metrics on any stock – anytime.Unlock RankingsEdge RankingsMomentum61.96Growth35.64Quality40.11Value23.45Price TrendShortMediumLongOverviewThis content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.Market News and Data brought to you by Benzinga APIs© 2025 Benzinga.com. . .EarningsAnalyst RatingsOptionsDividendsIPOsdate▲▼ticker▲▼name▲▼Price Target▲▼Upside/Downside▲▼Recommendation▲▼Firm▲▼Click to see moreAnalyst RatingsupdatesAnalyst CalendarJoin Benzinga Edge and unlock all the major upgrades, downgrades, and changes to the market's most accurate analysts.Click to JoinPosted In:NewsPrice TargetReiterationTop StoriesAnalyst RatingsTechTrading IdeasExpert Ideas