Honeywell (HON) +2.1% in Friday’s trading as J.P. Morgan upgraded shares to Overweight from Neutral with a $255 price target, raised from $218, saying the stock has extended its discount to a sum-of-the-parts valuation, comfortably off its highs compared to SOTP peers that are up a weighted 20%.
Honeywell’s (HON) “messy 2026 EPS profile, which will be cleared with guide, as creating an opportunity ahead of the looming break-up, on which we should get clarity on many key fronts in the next six months,” JPM analyst Stephen Tusa said.
Aerospace remains the key driver, as Honeywell (HON) expects all markets to grow by high single digits this year, but Tusa sees potential upside as industry participants expect another year of double-digit commercial OE and aftermarket growth, and optimism around the business jet demand environment likely will continue, where the company has outsized exposure in the super mid-size and above, which is the high value portion of the portfolio; additionally, rising geopolitical tensions and the prospect for FY 2027 budget growth have improved the outlook for defense.
Meanwhile, Tusa downgraded 3M (MMM) cut to Neutral from Overweight with a $182 PT, citing below-sector near-term earnings growth potential after having materially outperformed since new management came in, while applauding execution on cultural and operational improvements beyond expectations.
“While there is clearly momentum, we believe the early innings low-hanging fruit is behind in terms of the self help initiatives, solidly transitioning into the next phase which is reinvigorating the innovation engine, which we think will take time,” Tusa wrote.