TD Cowen Starts Honeywell Aerospace at Hold Ahead of Market Debut

Honeywell Aerospace (NASDAQ:HONAV) is scheduled to statesman trading arsenic a standalone nationalist institution connected Monday, with TD Cowen launching sum with a Hold rating, citing expectations for much constricted net leverage than galore of its aerospace assemblage peers.

The brokerage assigned the recently listed institution a terms people of US$250, highlighting concerns that nett maturation whitethorn not importantly outpace gross enlargement implicit the adjacent 2 years.

TD Cowen expects Honeywell Aerospace's adjusted operating nett to summation astatine a complaint beneath 10% during 2026 and 2027, supported by astir 8% integrated income growth. The steadfast besides anticipates lone humble borderline betterment and nary meaningful simplification successful the company's stock number implicit the period.

At the clip of the spin-off, Honeywell Aerospace is expected to transportation nett indebtedness equivalent to astir 3.1 times EBITDA, which TD Cowen believes volition bounds the company's quality to prosecute important superior returns. Instead, the brokerage forecasts a comparatively humble dividend, stock repurchases mostly aimed astatine offsetting equity-based compensation, and smaller bolt-on acquisitions alternatively than large-scale mergers and acquisitions.

"HONA's op. nett gains are apt to transcend income maturation by lone 1-2%, beneath that of the Buy-rated aero suppliers that we cover," TD analysts said successful a note.

The spin-off is expected to pull important capitalist attention, with Honeywell Aerospace acceptable to articulation some the S&P 500 and the S&P 100 connected its archetypal time of trading.

The listing is besides important for existing Honeywell International (NASDAQ:HON) shareholders, who received 1 Honeywell Aerospace stock for each 2 Honeywell shares they owned arsenic portion of the separation.

Not each analysts stock TD Cowen's cautious view. RBC precocious initiated sum with a Buy standing and a terms people of US$300, reflecting a much optimistic outlook for the recently autarkic aerospace business.

Honeywell Aerospace banal terms

Honeywell banal terms