Bank of America upgrades Honeywell to buy, citing potential growth in aerospace and oil and gas
Bank of America said investors should consider shares of Honeywell , which has an attractive mix of end markets that will benefit from broader manufacturing trends. Analyst Andrew Obin upgraded shares of Honeywell to buy from neutral, and maintained its price target, saying in a Monday note that he approves of the company's execution and sees strong potential for its end markets in aerospace and the oil and gas industry. "HON's end market mix includes aerospace (33% of revenue) and oil & gas (12%), along with longer-cycle non-residential construction and recent execution has been strong," Obin wrote. Honeywell is expected to generate $35.6 billion in revenue in 2022, according to Bank of America estimates. Bank of America maintained a $210 price target on the company. It implies about 21% upside from Friday's closing price. The aerospace and oil and gas industries will continue to benefit even as broad manufacturing demand diminishes, particularly in consumer-facing companies, the note read. Aerospace will get a boost from rising defense spending, while oil and gas will be able to profit from greater spending in energy infrastructure. The analyst also noted that the Honeywell shares are priced at premium to its peer group as investors shifted to quality stocks. Shares of Honeywell fell 16% this year, compared with an average 31% decline in other stocks in Bank of America's coverage of the industrials sector. "The company has executed well recently in the volatile macro environment," Obin wrote. "It was one of few companies in our coverage to beat-and-raise in 1Q and we view 2Q earnings as a likely positive catalyst." Shares of Honeywell climbed about 1% in Monday premarket trading. —CNBC's Michael Bloom contributed to this report.