Honeywell downgraded to Sell at UBS on slower outlook, high valuation
Robert Way

Honeywell International (NASDAQ:HON) on Wednesday was downgraded to Sell from an investment rating of Buy by analysts at UBS. They said the industrial conglomerate is overvalued and faces a slowdown in orders as the global economy shrinks.
âHoneywellâs (HON) outsized $29 billion backlog into the 2023 slowdown will likely protect near-term results,â Chris Snyder, analyst at UBS, said in a January 4 report. âHowever, order momentum is needed to protect valuation.â
Honeywell trades at a premium of 35% to the Standard & Poorâs 500 stock index (SP500), or two standard deviations greater than the five-year average of 12%, according to UBS.
âThe challenge for Honeywell (HON) is that the macro slowdown, shortening lead times and easing price contribution will likely result in further order deceleration/potential declines,â according to UBS. âThis dynamic carries particular risk for Honeywell (HON) given the lofty valuation.â
UBS lowered its price target for Honeywell (HON) to $193 a share from $220 a share, based on a price-to-earnings multiple of 19 times results for Q4 2023 to Q3 2024.
Honeywell's (HON) stock has risen 3.6% in the past 12 months, contrasting with a 20% decline for the S&P 500 (SP500).
UBS also downgraded Emerson Electric (EMR) to Neutral from Buy, and Hubbell (HUBB) to Sell from Neutral.





UBS estimates for Honeywell International Inc. (HON), Jan. 4




EPS








New


Old


2022
$8.76


$8.68


2023
$9.21


$9.70


2024
$10.44


$10.64