Is Honeywell Stock a Buy After Its Latest Structural Shakeup?
Key Points
Honeywell Technologies gains a renewed focus on high-growth areas.
The stock is more likely now to be included in ESG-related funds, since it isn't involved in the defense industry.
The company just spun off its aerospace division.
- 10 stocks we like better than Honeywell Technologies ›
On June 29, Honeywell completed its multistage portfolio transformation into three independent companies: Honeywell Technologies (NASDAQ: HON), Honeywell Aerospace (NASDAQ: HONA), and Solstice Advanced Materials (NASDAQ: SOLS).
Solstice Advanced Materials, which makes refrigerants and other products, spun off last October. The latest spinoff gives Honeywell investors one Honeywell Aerospace share for every two Honeywell Technologies shares held as of June 15, with cash paid for fractional shares. The move, done in a 1-for-2 reverse split, leaves Honeywell Technologies as a pure-play industrial automation company.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Not all spinoffs work. The moves sometimes lead to additional system separation costs and management distraction that can depress earnings, at least over a few quarters. Honeywell has also given away its aerospace division, a resilient, high-growth segment with a defense and commercial backlog of more than $19 billion. The new Honeywell company may be more sensitive to economic cycles and tariff risks, but here are three reasons why the industrial stock may be a buy:
Image source: Getty Images.
A stronger focus on industrial automation
Honeywell is no longer a slow-moving conglomerate. It is now focused on three core segments: building, process, and industrial automation. This tighter strategy allows the company to capitalize directly on secular megatrends, such as warehouse automation, artificial intelligence (AI)-driven building energy efficiency, and the industrial world's transition toward autonomy.
In the first quarter, its building automation and industrial automation segments shone with 11% year-over-year sales growth. Process automation reported 5% sales growth over the same quarter a year ago. All three segments outperformed the spinoff segment, aerospace technologies, which had 4% growth, year over year.
In the old conglomerate setup, Honeywell's business units constantly competed internally for research and development dollars and capital expenditure. Now, 100% of the cash generated by the automation business can be aggressively reinvested in advanced software, industrial cybersecurity, and climate-tech solutions, without funding expensive aerospace manufacturing or cyclical chemical lines.
Stake in Quantiniuum may be overlooked
Honeywell Technologies retains a retains a 49.1% stake in Quantinuum (NASDAQ: QNT), the quantum-computing company formed from Honeywell Quantum Solutions and Cambridge Quantum. Quantiniuum is considered the world leader in full-stack quantum computing, holding the industry benchmark for quantum volume via its trapped-ion hardware. Quantiniuum just began trading on June 4. Any rise in that stock directly lifts the equity value of Honeywell Technology's corporate holdings.
By maintaining near-majority voting control over the premier quantum computing vehicle, Honeywell may be able to prevent its legacy industrial businesses from being disrupted by next-generation computing architectures.
The remaining company is expected to generate approximately between $19.9 billion and $20.2 billion in revenue in 2026, up from $17 billion in sales from its automation segments in 2025. Management is targeting 4% to 6% organic growth, annual margin expansion of more than 60 basis points, and double-digit earnings growth over the next three years. The business also has assets that the headline valuation may not fully recognize.
Favorable macro tailwinds for infrastructure
The stand-alone automation business has a solid defensive cushion. Federal initiatives to rebuild domestic manufacturing infrastructure, alongside robust enterprise demand to optimize smart buildings and data centers, provide a highly visible pipeline of demand for Honeywell's control systems and software.
The separation also significantly reduces Honeywell's direct defense exposure, potentially making the remaining company more attractive to ESG-sensitive funds and mandates.
In the short term, the ride may be bumpy. On June 25, the stock closed at $247.02, but as of Wednesday afternoon, it is now trading at around $221.72 after the split. In the long run, though, analysts have set an average price target of $474.75 for Honeywell Technologies stock, up 114% from its current price.
Should you buy stock in Honeywell Technologies right now?
Before you buy stock in Honeywell Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Honeywell Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $418,761!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,195,804!*
Now, it’s worth noting Stock Advisor’s total average return is 918% — a market-crushing outperformance compared to 208% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of July 3, 2026.
James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Honeywell Technologies. The Motley Fool has a disclosure policy.
Recommended Articles
