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Honeywell (HON) and Denso have identified a business opportunity in the electric aircraft components market, and they are pursuing it by teaming up to build electric propulsion systems for aircraft. Their electrified power sources will help provide cleaner, quieter and more environmentally-friendly transportation in and between cities.
The partners plan to deliver flight test configurations of the electric propulsion systems in 2022. The companies said they had initiated talks with potential customers about integrating the new electric propulsion systems into their aircraft. They are initially targeting aircraft used to deliver packages and fly passengers across cities, which comprise a segment called urban air mobility (UAM).
Denso is a specialist in auto components and technology that supplies nearly every vehicle on the road today. Honeywell operates a diversified business, and its aerospace division builds engines, mechanical systems, and electronics for aircraft.
"Honeywell technologies have helped power human flight for more than 100 years, and as electric propulsion for aircraft takes shape, Honeywell will be at the forefront,” commented Dave Marinick, president of Engines & Power Systems, Honeywell Aerospace.
In addition to making money selling these systems, Honeywell and Denso count on the partnership to reduce the environmental impact of their operations. Both companies have committed to make their operations carbon neutral by 2035. (See Honeywell stock analysis on TipRanks)
JPMorgan analyst Stephen Tusa reiterated a Buy rating on Honeywell stock but did not assign it a price target. Tusa believes investors have not fully understood Honeywell’s growth potential.
“Investors underappreciate the many growth initiatives Honeywell has embedded in its portfolio that are on the cusp of bearing fruit in the middle of key early stage secular trends," noted Tusa.
Consensus among analysts on Wall Street is a Moderate Buy based on 8 Buy and 5 Hold ratings. The average analyst price target of $237.82 implies 5.70% upside potential to current levels.
HON scores a “Perfect 10” on TipRanks’ Smart Score rating system, implying the stock will likely outperform the market.
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