Al Root

Honeywell stock jumped late Monday after a report that the company is ready to break up along the lines suggested by an activist investor.

The industrial conglomeratecompany could spin off its aerospace business in a breakup.

Shares jumped about $8, hitting $228.97 before inching back to $220.04 shortly after 2 p.m. Eastern time. The S&P 500 was down 0.2% and the Dow Jones Industrial Average was up about 0.6%.

Honeywell declined to comment on the report from Bloomberg.

In November, Elliott Investment Management disclosed a stake in the company and argued for a breakup, believing a stand-alone aerospace company and automation company would be worth more than the conglomerate.

The company has said it is willing to engage with Elliott.

Wall Street expects 2025 aerospace revenue of about $17 billion and total sales of about $41 billion. Based on comparable companies such as GE Aerospace, the Honeywell aerospace business could be worth roughly $100 billion.

The rest of Honeywell, which might compare with the likes of Rockwell Automation and Schneider Electric, could be worth another $100 billion.

Adjusting for debt, that implies a stock price of about $275 or $280.

That's only a rough estimate but illustrates why Elliott forced the matter. Elliott suggested a 75% surge was possible. That implies closer to $380 a share, but that price objective was over the coming couple of years.

The stock is roughly unchanged since Elliott disclosed its stake. Investors, for now, appear to be taking a wait-and-see approach.

Write to Al Root at allen.root@dowjones.com

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January 13, 2025 15:23 ET (20:23 GMT)

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