Honeywell Aerospace’s when-issued stock (HONAV) surged 9.4% in after-hours trading on June 23 after S&P Dow Jones Indices confirmed the spinoff will enter both the S&P 500 and S&P 100 when it begins regular-way trading on June 29.
Honeywell Aerospace Inc. Common Stock When Issued, HONAV
The index double-dip is a big deal. Funds that track either index will need to hold HONA by the June 29 effective date, creating near-immediate institutional buying pressure.
HONA replaces Conagra Brands (CAG) in the S&P 500. Conagra gets pushed down to the S&P SmallCap 600, a demotion that typically forces large index funds to sell the stock.
Meanwhile, HONA takes Honeywell International’s (HON) slot in the S&P 100, as the parent company restructures under the new name Honeywell Technologies.
The spinoff is structured as a tax-free, pro-rata distribution. Honeywell shareholders of record as of June 15 receive one HONA share for every two HON shares held.
Honeywell Technologies, the automation-focused business that stays behind, simultaneously executes a 1-for-2 reverse stock split, cutting shares outstanding from roughly 634 million to 317 million.
When-issued HONAV trading wraps up June 26. Regular-way trading under HONA kicks off June 29 on Nasdaq.
The valuation argument is fairly straightforward. GE Aerospace, a close pure-play peer, currently trades at around 46 times forward earnings. Honeywell’s pre-split multiple sat at roughly 21.6 times.
Conglomerate structures tend to trade at a discount. Pure-play businesses let investors benchmark performance against direct peers more easily, which typically pushes multiples higher.
Management is projecting 6–8% annual sales growth for the aerospace unit. The automation business targeting 4–6%.
Goldman Sachs analyst Joe Ritchie raised his price target on the parent to $276 from $258 and kept a Buy rating heading into the separation.
RBC Capital also lifted its target to $275 following a positive investor day, forecasting mid-single-digit organic growth.
Those analyst upgrades came even as the broader market softened. The Nasdaq and S&P 500 both closed at more than one-week lows on June 23, pressured by selling in semiconductor stocks.
Barclays and Stifel both raised their year-end S&P 500 index targets to 7,800 on the same day, pointing to strength in corporate earnings.
The spinoff’s reach also extends to Canada. CIBC has applied to list Honeywell Aerospace Canadian Depositary Receipts on the Toronto Stock Exchange under the ticker HONA.
The first major post-split earnings checkpoint arrives July 25, when Honeywell Technologies reports as a standalone automation business for the first time.
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