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UBS Raises Price Target On Honeywell International (HON) To $61.00, Maintains 'Neutral'

 April 23, 2012 01:59 PM

(By Balachander S) UBS Securities raised its price target on shares of Honeywell International Inc. (NYSE:HON) to $61.00 from $57.00, while maintaining its "Neutral" rating on the stock, following the company's first-quarter results.

The brokerage noted that quarterly adjusted EPS of $1.04 was ahead of consensus of $0.99 and guidance of $0.96-$0.98. The beat was driven by commercial Aero (+18% core equipment and +16% aftermarket sales) and UOP (+40%). Results at ACS and Transportation were roughly in-line, with both businesses impacted by European and China weakness. Segment margin of 15.2% increased 70 bps year over year. UBS estimates segment incremental margins of around 24%.

[Related -Honeywell International Inc. (HON) Q4 Earnings Preview: What To Watch?]

"Overall, a very strong quarter, in our view," UBS wrote in a note.

The company raised guidance at the midpoint just slightly more than the 1Q beat, as comparisons for the company's longer cycle businesses become more challenging, the brokerage said. For Aero, commercial OE is expected to remain strong, but mgmt noted that aftermarket comps are getting tougher, while D&S will see steeper declines later in the year, UBS added.

UOP is expected to remain strong in 2Q (scheduled catalyst shipment), with growth moderating in the back half. For ACS and transport, Europe is likely to remain weak for the year, while business in China is expected to improve in 2H12, UBS said.

HON shares are currently trading 0.74% lower at $58.95. In the past year, the stock has been trading in the 52-week range of $41.22 to $62.28.



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