Honeywell International (HON) is poised for an "attractive" 30% upside potential to the current share price after announcing its intent to separate its automation and aerospace businesses, Deutsche Bank said in a report Friday.

The bank said this potential is based on its updated base case sum-of-the-parts valuation, which also shows a 57% upside potential in a bull case.

Deutsche Bank said Honeywell's decision is right because its "conglomerate structure has become a burden to organic growth [compared with] peers."

"The rationale for a separation is about much more than a financial engineering exercise -- it is about creating more focused, better-run companies that can control their own destiny with respect to reinvesting capital," the bank said.

Deutsche Bank upgraded Honeywell to buy from hold and lifted its price target to $260 from $236.

Price: 208.83, Change: -1.00, Percent Change: -0.47