Honeywell Attracts Wells Fargo's Attention with Attractive Valuation

Wells Fargo initiated coverage on Honeywell International (HON) with an Equal Weight rating and a price target of $231.00, according to a report released Thursday.

The firm said HON has the ingredients to offer more growth, with leading technology across mostly attractive end markets, but noted that margins are already high and a lack of balance sheet optionality near term limits upside.

Despite this, demand momentum supports the company's 4-6% growth algorithm, Wells Fargo said. Organic orders grew 16% in the second quarter, backlog increased 9%, and momentum continued through the first two months of the third quarter.

Honeywell has posted 11% revenue growth over the last twelve months, demonstrating strong execution, and is trading at a P/E ratio of just 8.18, making it attractively valued relative to its industrial conglomerate peers.