Honeywell International's (HON) improving performance across its three segments and faster-than-expected elimination of stranded costs are strengthening its earnings outlook for 2027, RBC Capital Markets said, following a Q3 operating beat and a second consecutive quarterly increase in 2026 guidance.
The company reported Q3 adjusted earnings of $2.27 per share above the $2.17 FactSet consensus. RBC noted that organic sales growth of 7% exceeded the company's 4% to 6% guidance range, while segment margins beat its estimate by 100 basis points.
The investment firm said in a Thursday note that all three segments contributed to organic growth, with the Process Automation and Technology business delivering a long-awaited 8% inflection and Industrial Automation margins expanding 350 basis points.
The Building Automation segment also delivered its eighth consecutive quarter of high-single-digit organic growth. RBC highlighted that stranded costs are now expected to be fully eliminated by the end of 2026, earlier than previously expected, setting up a "cleaner 2027" for the company.
The investment firm said the quarter "builds conviction in the standalone earnings power of the business and the credibility of the $12 EPS target for 2029."
RBC has an outperform rating on Honeywell and cut the company's price target to $269 from $270.
Price: 218.12, Change: -0.19, Percent Change: -0.09
