Honeywell International (HON) delivered a mixed Q1 operating beat and reiterated 2026 guidance, despite navigating portfolio transformation, geopolitical disruption and supply chain headwinds, RBC Capital Markets said.
Aerospace faced an acute supply chain disruption in January and February, concentrated in mechanical products within engines and power systems, which ended a 14-quarter streak of double-digit output growth but recovered sharply by March, the strongest revenue month of the quarter, according to the note Friday.
Honeywell expects its short-cycle businesses to grow mid-to-high single digits in Q2. Building Automation is expected to sustain high-single-digit growth, supported by data center and healthcare demand, while Industrial Automation short-cycle should benefit from continued recovery in China and Europe.
Process Automation and Technology faces near-term headwinds from Middle East disruptions but is expected to normalize in the second half of the year as higher oil prices support services and catalyst demand, according to the note.
Honeywell expects Q2 adjusted earnings per share of $2.35 to $2.45, below the $2.56 consensus and RBC's $2.50 estimate, reflecting a higher tax rate and between $100 million and $150 million headwind from the Middle East conflict.
RBC maintained an outperform rating on Honeywell with a price target of $268.
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