Honeywell Stock Falls After Split News Despite GE's Spinoff Success

Core Viewpoint - Honeywell plans to split into three companies to enhance stock returns, following pressure from activist investor Elliott Investment Management, despite a recent 10% drop in share price due to mixed financial performance and guidance [2][4][5]. Group 1: Company Strategy and Financial Performance - Honeywell's share price has underperformed the market, increasing only 8.3% over the past year compared to a 22.6% rise in the S&P 500 [4]. - The company reported Q4 2024 net sales of $10.09 billion, a 6.9$1.29 billion, up 2.4% from the previous year [8]. - Q4 2024 adjusted earnings per share were $2.47, down 8.4$1.9 billion [8]. - The 2025 revenue forecast is $40.1 billion, which is$1.2 billion below the FactSet sales consensus, and the adjusted earnings per share forecast is $10.30, 62 cents below the average [8]. Group 2: Market Expectations and Analyst Insights - Elliott Investment Management estimates that the breakup could increase Honeywell's stock price by 51$245.31 [16]. - The aerospace technologies business, which accounted for 40% of Honeywell's revenue and grew 13% in 2024, could be valued at approximately 104 billion as an independent entity [18][19]. Group 3: Industry Context and Comparisons - The trend of conglomerate breakups is noted, with companies like DuPont and Aptiv also pursuing similar strategies [7]. - Historical data indicates that while some conglomerate breakups have led to increased shareholder value, a Bain & Co. study found that 50% of public spinoffs from 2000 to 2020 did not create additional value within two years [15]. - GE's successful breakup has set a precedent, with its aerospace unit now valued at around 215 billion, significantly higher than pre-breakup levels [11].