Sometimes even a bucketload of great news doesn’t quite have the effect you were hoping for. Honeywell (NASDAQ: HON) saw its stock price fall after the company released its FY24 Q2 earnings report, which showed that it beat analyst expectations for earnings-per-share (EPS) and revenue. Its EPS was $2.49, compared to Wall Street’s consensus estimate of $2.42. Sales were up by 5% YoY, and Honeywell’s revenue reached $9.6 billion, beating analyst predictions of $9.4 billion.

Did HON rally on this news? Nope. The share price dropped from a high of $218.86 on Tuesday to $202.45 by Thursday’s close. During the Q2 period, Honeywell’s stock vacillated between a high of $210.60 and a low of $189.75. Shares began an upward climb again in mid-May, reaching a new high for this year of $220.71 in mid-July, ahead of this recent drop.   

How Does Honeywell Work?

Honeywell International is a Fortune 500 company that provides advanced technology products for various industries. They operate in four business sectors: aerospace, building automation, performance materials and technologies, and safety and productivity. Its business model aligns with three global trends—the future of aviation, energy transition, and automation. Honeywell recently announced two planned acquisitions. Air Products focuses on liquefied natural gas process technology and equipment, while CAES specializes in radio frequency technologies.

Getting Back On Track

The stock’s recent drop was likely due to the company lowering its full-year guidance. While its aerospace and defense business is seeing greater demand, with $3.9 billion in revenue for a 16% YoY rise and comprising more than 35% of total Q2 revenue, its industrial automation sector dropped by 8% YoY. Ongoing geopolitical and economic uncertainties, specifically in terms of inflation concerns and supply chain disruptions, provide additional headwinds.

If the company can address its industrial automation segment challenges, manage outside pressures, and continue to compete with strategic acquisitions and alliances, its share price could rally.

Analyst sentiment is cautiously optimistic, with a Moderate Buy consensus based on seven Buy ratings and six Holds. HON’s average price target is $227.73, with shares currently at $202.65, implying more than 12% upside potential.    

Neither Julie Stoller nor Stocks.News have positions in this company.