/Quantum%20Computing/A%20concept%20image%20with%20a%20brain%20on%20top%20of%20a%20blue%20circuit%20board_%20Image%20by%20Gorodenkoff%20via%20Shutterstock_.jpg)
Quantum computing has become a hot investment theme, promising to reshape industries with mind-bending processing power, solving complex problems that today’s supercomputers can’t even crack. When thinking of quantum stocks, big tech names like Alphabet (GOOGL), Microsoft (MSFT), and Nvidia (NVDA) often steal the spotlight alongside pure-play quantum companies such as IonQ (IONQ), D-Wave (QBTS) or Rigetti (RGTI). However, one unexpected “Buy”-rated contender that deserves attention right now is Honeywell (HON).
Honeywell is no stranger to high-growth opportunities, with its expertise spanning advanced manufacturing and industrial automation. While the conglomerate grabbed the spotlight in February with its bold plan to split into three independent companies focused on advanced materials, automation, and aerospace, one of its recent intriguing moves lies within its quantum computing ambitions. According to a source with direct knowledge of the matter, the company plans to take its Quantinuum unit public within the next two years, setting the stage for a major quantum IPO.
Quantinuum, the quantum powerhouse formed from the 2021 merger of Honeywell Quantum Solutions and Cambridge Quantum, has recently delivered a real-world quantum computing breakthrough. Its System Model H2 completed a number-generation task beyond the reach of classical computers. The milestone marks a major turning point, with the company declaring quantum computing’s future is no longer “years away.” So, with these factors in play, could Honeywell’s quantum computing ambitions be the hidden catalyst that makes its stock a must-buy this year?
About Honeywell Stock
North Carolina-based Honeywell International (HON) is a global powerhouse serving diverse industries and regions. The company’s operations are strategically aligned with three transformative megatrends: automation, the future of aviation, and energy transition. In addition to these core areas, Honeywell has also invested heavily in quantum computing through its Quantinuum business.
As the company looks toward a corporate split, attention has turned to Quantinuum’s future. With Honeywell now exploring the possibility of taking Quantinuum public in the next two years, this potential move underscores Honeywell’s ambition to capitalize on the rapidly growing quantum computing-as-a-service market, positioning Quantinuum as a significant player in the industry’s evolution.
Commanding a market capitalization of around $138 billion, shares of this industrial giant have posted roughly a 7.8% return over the past year, trailing behind the broader S&P 500 Index’s ($SPX) 9% gain during the same stretch. So far this year, the stock is down 4.5%, while the SPX slumped nearly 3.5% on a YTD basis.
The company appears committed to rewarding investors through dividends. Most recently, on March 14, Honeywell paid its shareholders a quarterly dividend of $1.13 per share. The company’s annualized dividend of $4.42 per share translates to an appealing 2.1% yield. With a solid payout ratio of 44.32%, Honeywell ensures a healthy balance, offering investors reliable returns while maintaining the financial flexibility needed to drive future growth and innovation.
Meanwhile, in terms of valuation, the stock is trading below its historical levels. At 20.5 times forward earnings and 3.57 times sales, HON is priced below its own five-year averages of 22.99x and 3.84x, respectively.
Honeywell Beats Q4 Earnings Projections
On Feb. 6, Honeywell reported its fourth-quarter earnings results, which blew past both Wall Street’s top- and bottom-line expectations. Net sales for the quarter jumped 6.9% year over year to $10.1 billion, while analysts had called for roughly $9.9 billion. Plus, even though adjusted EPS of $2.47 took an 8% year-over-year hit, it still managed to outshine Wall Street’s forecast figure by nearly a 7% margin.
Despite ongoing macroeconomic headwinds, Honeywell’s backlog soared 11%, hitting a record $35.3 billion, signaling strong future demand and resilience in its business operations. However, despite surpassing Wall Street projections, Honeywell’s stock took a nosedive, plunging almost 5.7% on the same day and another 2.1% on Feb. 7, as investors were left unimpressed by the overall performance. While the aerospace division contributed heavily to top-line growth, other segments lagged behind.
Adding to the uncertainty, Honeywell also revealed bold plans to fully separate its Automation and Aerospace Technologies divisions, following its earlier move to spin off the Advanced Materials unit. After the split, which is expected to be finalized by the second half of 2026, investors will hold shares in three distinct publicly listed entities focused on aerospace, materials, and technology. The aim is to create more streamlined, growth-oriented businesses that can operate with greater focus and agility.
Looking forward to fiscal 2025, management expects sales to range between $39.6 billion and $40.6 billion, with organic sales growth in the range of 2% to 5%. At the same time, adjusted EPS is expected to land between $10.10 and $10.50, marking a 2% to 6% increase. By comparison, analysts monitoring Honeywell expect its bottom line to grow 4.7% year over year to $10.35 per share in 2025.
What Do Analysts Expect for Honeywell Stock?
Despite uncertainly looming large over Honeywell’s complex corporate split, Wall Street continues to favor the stock, maintaining a “Moderate Buy” rating overall. Of the 22 analysts offering recommendations, 11 advocate a “Strong Buy,” and the remaining 11 suggest “Hold.” The average price target of $240.15 represents potential upside of 11.5%, while the Street-high target of $300 suggests an even greater upside of 39% from current levels.
