Activist investment fund Elliott Investment Management has revealed a massive position in Honeywell International (HON) and called for the company to be broken up. Having outlasted many of its peers, Honeywell is a remaining testament to the age of the American conglomerate. But now, even its long-lasting reign may be ending. Elliot’s $5 billion stake in Honeywell enables it to call for significant changes that it seems to believe can help usher in a turnaround for HON stock.
What’s Happening with Honeywell Stock Today?
While it spent most of this morning trending downward, Honeywell stock has managed to regain some momentum despite this news from Elliot. As of this writing, HON stock is up 3% for the day, continuing the trajectory it has been on all week. However, despite remaining in the green for the past three months, Honeywell has declined several times and struggled to keep its momentum constant.
As the Wall Street Journal reports, though, Honeywell has failed to outperform the broader market of late, leaving the door open for an institutional investor to launch an activist campaign. Elliot is recommending that the company break up its automation and aerospace businesses, the latter of which is responsible for 40% of Honeywell’s annual revenue.
If Honeywell follows Elliot’s recommendations, it would likely operate in a manner similar to General Electric (GE), a longtime rival and former conglomerate that split into multiple companies last year. GE stock has performed well since, as have former divisions GE Vernova (GEV) and GE Healthcare (GEHC). This, along with HON stock’s performance today, suggests that Honeywell could be well served to opt for a breakup.
Wall Street Is Sidelined on Honeywell Stock
Turning to Wall Street, analysts have a Moderate Buy consensus rating on HON stock based on six Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 26% rally in its share price over the past year, the average HON price target of $228.67 per share implies 1.5% downside risk.
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