Well, I guess all good things really do come to an end after all. Which is why after fifteen years of non-stop Honeywell hype, JPMorgan has finally decided to hit the brakes, throw up the peace sign, and move to the sidelines. Yep,  they downgraded the industrial titan from an “overweight” rating to a “neutral” one. Whadda tragedy. 

(Source: Giphy) 

In short, in an analyst report that reads more like a “It’s not me, it’s you” breakup text, JPMorgan’s Stephen Tusa made the message clear: while Honeywell’s been doing some things right, the planned spinoff of its Advanced Materials division is like putting a speed bump on the Autobahn. Sure, the company’s shares are cheap, but that’s not enough to keep JPMorgan on board. Meaning right now, they’re looking for something a little less… complicated.

(Source: MarketBeat) 

However, even with the downgrade, JPMorgan’s not exactly throwing Honeywell out with the bathwater. They did bump up their price target from $225 to $235, which suggests a potential 10% upside over the next year. 

Which to be fair is not horrible for a company that’s not only been on the struggle bus YTD, with shares barely ticking up 1% - but one that’s trading at a 20% discount to its sector (far below it’s usual 4% discount). Aaaaand with that, all the so-called “value investors” said Amen. 

(Source: Seeking Alpha) 

So, if Honeywell’s still got some juice left, why the downgrade? Well, it all comes down to clarity—or more specifically, the lack of it. Honeywell’s divestitures are shaking things up like a snow globe, and JPMorgan isn’t loving the view through all that glitter (see: forward earnings). Tusa put it bluntly: “We are moving to the sidelines, mostly due to the spin[off] that appears dilutive, resulting in another year that lacks clarity on the forward earnings curve.” Translation: Honeywell’s got potential, but right now its future looks about as clear as a fogged-up windshield in Florida. 

(Source: Reuters) 

But, but, but… keep in mind, Tusa does have a soft spot for Honewell’s long-term defensive growth profile and its new CEO strategy. Meaning, he is still bullish that the company’s renewed focus on organic growth under the fresh leadership might pay off… eventually. But again, the spin-off is turning JPMorgan’s Kool-Aid into straight Haterade as it’s not sure if the trade-off between growth and margins will work. In simpler terms: It’s a good move with horrific timing. 

So for now, JPMorgan’s content to sit on the sidelines and watch how this all plays out. Sure, Honeywell’s cheap, and the stock’s got some upside, but without clarity on clean earnings and more spin-offs potentially in the works, they’re not ready to double down. 

(Source: Giphy) 

And honestly? I can’t blame them. In a market that’s already full of uncertainty with the Fed sneezing and the market catching a cold every other week, Big Tech having mood swings, and CPI giving everyone trust issues this week… long-term potential doesn’t come before near-term certainty. And right now, Honeywell’s short-term outlook looks murky at best.

So with all that said, after a 15-year run, JPMorgan is ready to see other stocks. It’s not personal, it’s just the good ol’ greedy business we’re in. In the meantime though, keep an eye on Honeywell, and as always stay safe and stay frosty, friends! Until next time… 

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Stocks.News does not hold positions in any companies mentioned in the article.