Honeywell International: Accounting Reclassifications Leave Earnings Power Intact; Margin Resilience and Automation Strength Underpin Reiterated Buy and $255 Target

Analyst Alexander Virgo from Evercore ISI reiterated a Buy rating on Honeywell International and keeping the price target at $255.00.

Alexander Virgo has given his Buy rating due to a combination of factors that support a favorable risk‑reward profile for Honeywell International. The company’s newly detailed segment structure and the reclassification of the Solstice/Advanced Materials business as discontinued operations for 2025 mainly alter accounting presentation rather than underlying performance, leaving 2026–2028 sales and EBITA forecasts essentially intact. While the FlexJet-related charge reduces reported Aerospace revenue and EBITA and has associated cash implications, it does not change non‑GAAP earnings metrics, and these cash effects have been incorporated into the valuation framework. Moreover, Honeywell’s overall profit outlook remains robust, with the analyst’s group EBITA estimates for 2026–2028 still running above consensus, driven largely by strength in Automation rather than Aerospace.

At the segment level, Alexander adjusts expectations to reflect more realistic margin profiles—lowering Industrial Automation margins and raising Process Automation & Technologies profitability—without changing the overall earnings power of the group. The updated model still supports healthy segment-adjusted EBITA margins for 2025, in line with or slightly better than company guidance and market expectations, and the EPS outlook remains consistent with management targets. Because these accounting and segment realignment changes do not diminish Honeywell’s medium‑term earnings trajectory or margin resilience, the strategic upside from potential Aerospace separation and ongoing portfolio streamlining remains intact. With a $255 price target implying meaningful upside from current levels, Virgo concludes that Honeywell’s valuation remains attractive, justifying the reiterated Buy recommendation.

According to TipRanks, Virgo is a 3-star analyst with an average return of 6.4% and a 55.56% success rate.

In another report released on January 5, Mizuho Securities also maintained a Buy rating on the stock with a $240.00 price target.