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Investing.com -- Bank of America (NYSE:BAC) (BofA) has upgraded Honeywell (NASDAQ:HON) to Buy from Neutral and raised its price objective on the stock to $250 from $210, citing a return to stable or positive earnings revisions following a solid first-quarter beat.
The company’s shares rose more than 2% in premarket trading Wednesday.
The bank’s analysts note that Honeywell had underperformed its industrial peers over the past two years, weighed down by negative revisions and missed expectations.
“Honeywell is one of the most discounted names in our coverage on a terminal growth basis,” analysts led by Andrew Obin said in a note.
“As we believe earnings have now stabilized, we believe the company can start to close some of the valuation gap vs. peers,” they added.
The upgrade follows a better-than-expected Q1 report, with adjusted earnings per share (EPS) of $2.51 and improved full-year guidance.
BofA lifted its 2025 EPS estimate to $10.44 from $10.27, now modestly above the $10.43 consensus. The 2026 forecast also rose to $11.54.
BofA’s new price target is based on applying a valuation multiple of 17x estimated 2026 EV/EBITDA, reflecting improved earnings visibility, while still remaining below the 18x multiple at which peers are trading on 2025 estimates.
According to the analysts, Honeywell’s more defensive business mix underpins the bullish call. The company’s exposure to longer-cycle segments like Aerospace, Building Solutions, and Process Solutions is seen as a cushion in a potentially softer macro environment.
“In a recession scenario, we think HON would need to lower guide by less than peers, given a more defensive business mix,” the analysts noted.
The report also highlights improved internal forecasting and guidance clarity following BofA’s meeting with CEO Vimal Kapur and CFO Mike Stepniak. The bank believes the company’s collaborative approach to targets improves visibility and investor confidence.
Despite tariff-related headwinds embedded in the outlook—estimated at a 2.4% sales drag in the second half—Honeywell’s 2025 guidance is seen as achievable.
“We think earnings have largely stabilized for 2025,” the analysts wrote, adding that the spin of Advanced Materials expected in 2026 won’t materially impact this year.
