Honeywell International Inc (NASDAQ: HON) is in the red today following a report that it’s considering splitting into two public companies: one focused on automation and the second on aerospace and defense.
But famed investor Jim Cramer dubs the weakness in HON an opportunity as the Charlotte-headquartered firm seems to be moving in the right direction.
Elliott Investment Management has been pushing the conglomerate to break itself into two independent companies since November to boost shareholder value.
The activist investor has a stake of over $5 billion in Honeywell stock.
Why has Honeywell stock slipped recently?
Jim Cramer attributes the ongoing weakness in Honeywell International to the company’s financials “which have not been up to snuff.”
In its latest reported quarter, the Nasdaq-listed firm generated $9.728 billion in sales – down significantly from the $9.905 billion that experts had forecast.
Investors have been bailing on Honeywell stock also because its management lowered the full-year outlook in October.
The conglomerate now expects $38.7 billion in full-year sales versus the $39.4 billion it had guided for earlier.
Note that HON called it quits on its PPE business last year. In pursuit of simplifying its portfolio, the company recently decided in favor of spinning off its Advance Materials segment as well.
Despite the weakness, Honeywell shares remain attractive for income investors as they pay a dividend yield of 2.09% at writing.
Why is Cramer bullish on HON’s potential breakup?
Jim Cramer recommends loading up on HON shares following reports of a potential breakup as the split of its industrial peer General Electric was well-received by investors.
GE’s transformation enabled each of its businesses to play its strengths and tap into specific growth strategies to improve its financial performance.
Cramer is, therefore, convinced that, if done right, a split into two independent, publicly traded companies could unlock significant value of Honeywell shareholders, just as it did for General Electric in 2024.
Honeywell could officially announce plans to break up next month, as per people familiar with the matter.
Are Honeywell shares worth buying today?
The Mad Money host is far from being alone in keeping bullish on Honeywell stock.
Citi analysts continue to rate HON at “buy” as well and see an upside in it to $266 indicating potential for a 23% upside from current levels.
The investment firm is convinced that Honeywell International will report an in-line fiscal fourth quarter but will likely improve earnings in 2025.
Shares of the $141 billion behemoth based out of Charlotte, North Carolina are Citi’s top picks within the industrial space for 2025.
Additionally, Grandview Asset Management also loaded up on 4,500 shares of Honeywell International in the final quarter of 2024.
In total, the firm spent just over $1.0 million on HON stock.
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