Barclays Sees Honeywell Up 20% as Spinoffs Fuel $237.86 Stock
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
honeywellspinoff
Fazen Markets Editorial Desk
Collective editorial team · methodology
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A note from Barclays analysts on May 30, 2026, argues Honeywell International Inc. has clear catalysts as its planned separation of Energy and Building Automation businesses approaches. The bank initiated coverage with an Overweight rating and a $285 price target, implying over 20% upside from the stock’s recent level. Barclays highlighted the upcoming spinoffs as the primary driver for unlocking value, with shares trading at $237.86 as of 06:27 UTC today, up 2.73% intraday. The bank’s bullish call focuses on the strategic rationale of creating more focused, agile, and financially transparent public entities.
Honeywell first announced its intention to spin off its Energy and Building Automation segments in late 2025. The move represented a significant shift from the diversified conglomerate model that defined much of the 2010s and early 2020s. Major industrial peers like General Electric completed major breakups earlier in the decade, with GE Vernova and GE Aerospace shares seeing significant re-rating post-separation in 2024. Industrial spinoffs have historically created substantial shareholder value, with parent companies outperforming the broader market by an average of 6% in the year leading to the split, according to data from Fazen Markets research.
The current timing aligns with a cyclical upswing in aerospace and defense spending. This provides a strong backdrop for the remaining core Honeywell business, which will focus on Aerospace, Industrial Automation, and Materials & Technologies. The spinoffs are also designed to separate businesses with different capital allocation priorities. The Building Automation unit requires steady reinvestment, while the Energy business is positioned for growth in sustainable fuel and carbon capture technologies.
Honeywell’s stock traded at $237.86 in early trading on May 31, a gain of 2.73% for the session. This placed it near the top of its daily range of $231.84 to $239.94. Barclays' $285 target represents a potential 19.8% increase from that level. The stock's year-to-date performance of approximately 14% has modestly outpaced the S&P 500 Industrial Sector's 11% gain over the same period, as tracked by the SPDR Industrial Select Sector ETF (XLI).
| Metric | Value |
|---|---|
| HON Current Price | $237.86 |
| Barclays Price Target | $285.00 |
| Implied Upside | 19.8% |
| YTD Performance (HON) | ~14% |
For comparison, other recent industrial spinoffs saw their parent companies' shares appreciate an average of 15% in the six months following the announcement. The combined market capitalization of the two new entities, once launched, is projected by analysts to exceed the current implied value within Honeywell's structure. This valuation gap is a central part of Barclays' investment thesis.
The primary investment thesis is one of a sum-of-the-parts re-rating. Barclays expects the three separate public companies will trade at higher aggregate valuations than Honeywell does today. This is because focused pure-play companies often command higher earnings multiples than diverse conglomerates. The remaining core Honeywell will be a dominant aerospace supplier, potentially competing more directly for investor capital with companies like Raytheon Technologies and General Electric’s Aerospace unit.
The Building Automation spin-off will become a direct competitor to companies like Carrier Global and Johnson Controls, potentially intensifying competition in that sector. The Energy spin-off, focused on process automation and sustainable tech, will enter a field with players like Emerson Electric and Schneider Electric. Acknowledged risks include execution delays, potential stranded corporate costs, and market volatility that could depress valuations at the time of the separations. Institutional flow data from the past quarter shows increasing net buying interest in HON from active fund managers positioning for the catalyst.
The definitive timeline for the spinoffs is the primary catalyst. Honeywell management has indicated it targets completing the separations by the end of 2026. Investors should monitor the company's Q2 2026 earnings call in late July for updated guidance on the separation process and capital structures of the new entities. Regulatory filings for the spinoffs, Form 10 registrations with the SEC, will provide the first detailed financials for the new companies and are a key document to watch.
From a technical perspective, a sustained break above the $240 resistance level, near the day's high of $239.94, could signal further momentum. Conversely, support is seen near the 50-day moving average around $228. The relative performance of HON versus the Industrial Select Sector Index (XLI) will indicate whether the market is pricing in the spinoff premium. A failure to maintain outperformance could signal skepticism about the timeline or projected benefits.
Existing Honeywell shareholders will receive shares in the two new public companies on a pro-rata basis upon completion of the spinoffs. The exact distribution ratio will be announced closer to the separation date. Shareholders will then own stock in three separate entities: the core Honeywell, the Building Automation company, and the Energy company. This allows investors to decide to hold or sell each business based on its individual prospects, rather than being forced to own the bundled conglomerate.
General Electric's breakup, which concluded in early 2024, separated its aerospace, energy, and healthcare businesses into independent companies. The Honeywell plan is similar in its aim to unlock conglomerate discount but involves a smaller number of separations. GE's spinoffs were driven by financial distress and a need to simplify a deeply indebted balance sheet. Honeywell's move is more strategic, undertaken from a position of relative financial strength to accelerate growth in distinct end markets.
Honeywell has stated its intention for the transactions to be tax-free to U.S. shareholders for federal income tax purposes. This is a common structure for qualifying spinoffs under Section 355 of the Internal Revenue Code. Final ruling from the IRS is typically sought and confirmed prior to the completion date. International shareholders should consult local tax advisors, as implications vary by jurisdiction. The tax-free status is a significant factor in preserving shareholder value through the transaction.
Barclays sees a nearly 20% path higher for Honeywell stock as its spinoffs near completion, betting on a sum-of-the-parts revaluation.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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