Honeywell PSS sale multiple relatively lower than expected, says Citi

After Honeywell (HON) announced that it has agreed to sell its Productivity Solutions and Services business to Brady Corporation (BRC) for $1.4B in an all-cash transaction, Citi said the sale multiple is “relatively lower than what we had previously expected,” but it thinks the business is impacted by some cyclicality and a challenging operating environment, including higher memory pricing, leading to the “more muted valuation.” However, the firm views the transaction as “a longer-term incremental positive” that should position the stand-alone automation business to generate higher profitability, added the analyst, who has a Buy rating and $265 price target on Honeywell shares.