Honeywell International Inc. shares fell over 2% to $112 early in Friday trade after the aerospace parts maker cut their outlook. The decline was erased following the analyst day call which noted the company is seeing more positive sentiment from customers overall, and signs of a slight recovery in oil and gas.
The company adjusted 2017 EPS growth from double digit increases to growth of 6-10%. Organic revenue was also affirmed with growth now targeted at +1-3%.
CEO Adamczyk noted, “Honeywell continues to evolve, and in 2016 we are again demonstrating the strength of our portfolio and expect strong earnings in a continued slow-growth global environment. We are continuing to improve our growth profile through strategic portfolio actions and expect to see better sales and EPS growth and margin expansion in 2017 as a result. We have invested more than $8 billion in nine acquisitions since 2015, and all are now contributing to our growth. Our newly-formed Home and Building Technologies and Safety and Productivity Solutions businesses have improved our focus on driving growth, speed, and productivity. And, the nearly $250 million we have invested in restructuring and other actions is already delivering returns.”
Price action on the Honeywell daily chart shows that range bound trading remains intact. Since making a high at 120.02 on July 14th, price has had 4 major pullbacks. If we see price continue to consolidate here, key support may come from the $110-111.50 zone. If that level is taken out, we could see price target the $105.00 level. Key resistance remains the psychological $120 level.
The Trade: Buy HON at $111.50, with a stop loss at $110.50 and a take profit at $114.50. The Risk/Reward Ratio is 1:3