Honeywell International Inc. (HON) shares rose as much as 3.8% Friday after analysts at RBC Capital Markets upgraded the stock to outperform, citing the benefits of its recent spin-offs of Garrett Motion and Resideo Technologies.
The stock recovered from declines yesterday, when, even after an upgrade by Credit Suisse analysts, investors fled Honeywell and other industrial stocks on signs that manufacturing was slowing in the U.S. and as concerns grew about the prospects of U.S. companies making sales in China.
Honeywell rose $4.07, or 3.1%, to $134.14, in trading on the New York Stock Exchange as of about 2:45 p.m. Other major industrial companies also recovered on a day when a positive jobs report boosted U.S. equity prices across the board. Caterpillar Inc. (CAT) rose 5.5%, 3M Co. (MMM) gained 3.8% and United Technologies Corp. (UTX) advanced by 3.4%.
Honeywell has "higher profitability, dampened cyclicality, a stronger balance sheet, reduced legacy environmental/asbestos liabilities, and undivided management attention on its core businesses," RBC analyst Deane Dray wrote in the report. "Given prospects for more market turmoil, we expect investors to move up the quality curve."
Jim Cramer's Action Alerts PLUS team has also upgraded its recommendation of Honeywell to a "One," meaning it is a stock to buy now. Cramer's view is that the U.S. and China will soon resolve their differences and make a trade deal. Cramer is also a fan of Honeywell chief Darius Adamczyk.
"We've long believed the more focused, less cyclical new Honeywell was deserving of a higher market multiple, and we are excited to see what CEO Darius Adamczyk has in store for 2019," said Jeff Marks, Senior Portfolio Analyst at Action Alerts Plus