Is Honeywell Stock a Buy After Its Latest Structural Shakeup?

On June 29, Honeywell completed its multistage portfolio transformation into three independent companies: Honeywell Technologies (HON +3.66%), Honeywell Aerospace (HONA +8.74%), and Solstice Advanced Materials (SOLS 3.33%).

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.

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.

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NASDAQ: HON

Honeywell Technologies

Today's Change

(3.66%) $8.11

Current Price

$229.86

Key Data Points

Market Cap

$73B

Day's Range

$220.22 - $230.13

52wk Range

$195.77 - $260.15

Volume

5.7M

Avg Vol

2.6M

Gross Margin

38.06%

Dividend Yield

2.11%

Stake in Quantiniuum may be overlooked

Honeywell Technologies retains a retains a 49.1% stake in Quantinuum (QNT 4.91%), 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.