Industrial conglomerate Honeywell International (HON) is planning for a tax-free spin-off of its advanced materials unit, according to the Wall Street Journal. This division could be valued at over $10 billion as a separate publicly traded company. HON stock gained about 3% in the pre-market trading session.
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The advanced materials unit, which provides polymers, performance fluids, and additives, is part of Honeywell’s broader Energy and Sustainability Solutions segment. In the first six months of 2024, this division generated revenues of about $2 billion, accounting for roughly 10% of the company’s total sales.
This move aligns with CEO Vimal Kapur’s strategy to simplify the company’s business structure and focus on its core segments: Aerospace Technologies, Industrial and Building Automation, and Energy and Sustainability Solutions. Further, the spin-off is expected to enhance the financial flexibility of both Honeywell and the newly independent entity, allowing them to pursue future acquisitions and explore various growth opportunities.
Is HON Stock a Good Buy?
Turning to Wall Street, HON has a Moderate Buy consensus rating based on five Buys and five Holds assigned in the last three months. At $227.11, the average Honeywell price target implies 11.7% upside potential. Shares of the company have declined about 1.5% year-to-date.
