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Deere Initiated at a Buy, Adds Battery Biz

Value Line recently focused on Honeywell International (Nasdaq: HON) a diversified technology/manufacturing company, serving customers in four segments; Aerospace (35% of '20 sales) is a supplier of products, software, and services to OEMs; Building Tech. (16%) provides products and software to ensure facility safety, effeciency, and production; Performance Mats. (29%) deals in process tech. and automated solutions; Safety and Productivity (20%) focuses on improving productivity, safety, and performance.

Honeywell's earnings targets for 2021 and 2022 have been recalibrated to $8.05 and $9.05 a share, respectively. These figures are a nickel and a dime lower than where they stood three months earlier, notes Erik Manning, analyst with Value Line.

The downward adjustments are simply to reflect the lower sales tallies we now envision for the years. Third-quarter revenues missed the mark by about $225 million, as aerospace receipts grew by a lower percentage than we initially thought. Too, the backdrop heading into the winter months has grown increasingly unfavorable with inflation and supply-chain concerns showing no signs of letting up. Of course, situations can evolve quickly in the present day and if that turns out to be the case here, our 2022 presentation would brighten.

Recent pressures on the share price can be directly tied to the omicron variant of the coronavirus. Industrial stocks have been punished of late because pundits are concerned that this more contagious strain could disrupt economic growth.

Airlines were some of the hardest hit stocks when COVID first showed up on the radar, and HON has serious exposure to the aerospace arena, so it would be particularly vulnerable on that front.

The new Honeywell Transmission Risk Air Monitor looks like a game changer. The company has seen sizable gains in its healthy building solutions and services, and these new devices, while still detecting carbon monoxide and other harmful gases, can alert people to increased risks of airborne viruses. The pandemic has brought indoor air quality to the forefront of many minds and these monitors are a noticeable advancement.

This top-quality stock should be appealing to the income-minded at this juncture. The blue chip is neutrally ranked for year-ahead relative price performance. Too, appreciation potential for the pull to 2023-2025 is subpar. On the other hand, the quarterly dividend payout was boosted to $0.98 to close out 2021. The hike pushed this equity's yield above the Value Line median.

Further, we would be remiss if we did not point out that HON is a rock-solid defensive play if the volatility carries into 2022. The aerospace world needs to hold firm, however. The 3 to 5-Year Price Range is $215.00 - $250.00.

Editor’s Note: Value Line’s Market Focus newsletter provides unbiased insights on investments, the markets and the global economy. Value Line offers a broad array of investment research services. For details visit www.valueline.com.

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