Deutsche says Honeywell spin doesn’t signal ‘imminent’ broader breakup

After Honeywell announced that it plans to spin off its Advanced Materials business to shareholders in a tax-free manner as an independent U.S. publicly-traded company, Deutsche Bank notes that investors have increasingly questioned Honeywell’s conglomerate structure as the stock has underperformed the MI/EE peer group in four of the last five years. However, based on management commentary to date, the firm contends that this spinoff decision is consistent with Honeywell’s previously-stated portfolio optimization strategy and it “does not appear to us that a breakup of the company is imminent,” adding that today’s announcement does not change this view. The firm has a Hold rating and $226 price target on Honeywell shares.