Analyst Note| Joshua Aguilar |
Wide-moat-rated Honeywell had a historically tough second quarter, and management’s commentary on the call struck a downtrodden tone. The stock was flat on the news and we don’t expect to materially change our fair value estimate of $162 per share, though it could rise by $2 due to the time value of money. None of this was particularly surprising to us, given that a clear majority of Honeywell’s business faces severe economic headwinds in the commercial aerospace, oil and gas, and commercial building end markets. Honeywell’s top line decreased 18% year over year on an organic basis (with an additional 1-point headwind for currency), while segment margins (non-GAAP) contracted 280 basis points.