Summary
- Honeywell International has seen lower free cash flow growth than I anticipated over the past year.
- The stock may be trading above fair value at this price.
- However, free cash flow growth could increase if we start to see double-digit growth from Intelligrated continue.
Last October, I made the argument that Honeywell International (HON) remained undervalued on a free cash flow basis at a price of $150, with a price target of $220-230 seeming more appropriate.
Fast forward to today and the stock currently trades at $165, but not before having seen a sizable drop down to a low of $124 at the end of last year:
(Source: Investing.com)
On this basis, does a price target range of $220-230 continue to look realistic for this company? Upon revising my prior free cash flow forecast, I take the view that a target price of $180 may be more realistic for the stock at this point in time.
