Honeywell Set To Soar? Analyst Says Smart Price Hikes, Solid Backlog, M&A Could Drive Big Gains

Bank of America Securities analyst Andrew Obin reiterated a Buy rating on Honeywell (HON) and raised its price target to $275, designating it a top pick for Q2 2025 earnings with expectations for a beat-and-raise quarter. Despite trading at a 12% EV/EBITDA discount to peers, the analyst anticipates significant upside driven by resilient end markets, stronger-than-expected pricing, and the unreflected benefits of recent M&A and a record $36.1 billion backlog. This positive outlook, contrasting Honeywell's prior conservative guidance for a short-cycle slowdown, positions the company for positive estimate revisions and multiple expansion through the second half of 2025.

Analysis

A Bank of America analyst has designated Honeywell (HON) a top pick for Q2 2025, increasing the price target to $275 based on expectations of a 'beat-and-raise' quarter. The core of this bullish thesis rests on a significant disconnect between Honeywell's conservative initial guidance, which forecasted a sharp short-cycle slowdown, and the analyst's findings from channel checks and macro indicators suggesting resilient end-market demand. This resilience, particularly in Building and Industrial Automation, implies the company is positioned for a positive earnings surprise. Further supporting this outlook is a robust fundamental picture: the stock trades at a 12% EV/EBITDA discount to its peers, offering room for multiple expansion. Margin upside is anticipated from broad-based price increases tied to inflation, a factor confirmed by management. Additionally, recent M&A activity has structurally added an estimated 70 basis points to total company growth, the benefits of which are not yet fully reflected in reported earnings. This is underpinned by a record backlog that grew to $36.1 billion in the first quarter, enhancing revenue visibility and de-risking the forward outlook.

Key Decisions for Investors

• Investors may consider initiating or increasing exposure to Honeywell, as the current 12% valuation discount to peers presents a compelling entry point ahead of an anticipated 'beat-and-raise' Q2 earnings report.
• Focus should be placed on the upcoming Q2 results to validate the analyst's thesis, particularly looking for evidence of margin expansion from pricing power and any upward revision to the company's conservative full-year guidance.
• Beyond the immediate earnings catalyst, monitor management's commentary on the successful integration of recent acquisitions and the translation of the record $36.1 billion backlog into revenue, as these are key to the long-term growth and multiple expansion narrative.