Boston, MA, March 26--Honeywell International Ltd.'s earnings targets for this year could be at risk because of a steeper-than-expected downturn in the business jet market, higher raw material costs and a weakening housing market, according to Wall Street analysts.
UBS Warburg on Wednesday cut its rating on Honeywell to "neutral" from "buy." Details were not immediately available, but other analysts cited the layoffs and profit warnings coming from business jet makers such as Textron Inc. as evidence of weakness in Honeywell's aerospace business.
Honeywell makes everything from airplane parts and electronics to thermostats, carpet fiber and automotive products.
"While we still expect Honeywell to reach its (first-quarter) earnings guidance, we think (second-quarter) results will be surprisingly low, given trends in aerospace and chemicals," J.P. Morgan analyst Don MacDougall wrote in a note to researchers. "This may lead investors to expect earnings below management guidance for full year 2003."
J.P. Morgan has a neutral rating on Honeywell's stock and expects Honeywell to earn $1.56 a share this year.
In January, the Morris Township, New Jersey-based company said it expected to earn $1.60 to $1.70 a share in 2003. Honeywell forecast 2003 revenue of $22.2 billion, little changed from 2002's $22.3 billion.
Analysts are looking for Honeywell to earn $1.50 to $1.75 a share in 2003, with a consensus estimate of $1.65, according to Thomson First Call.
Steven Gluckstein, an analyst at Fahnestock & Co. Inc., reduced his full-year earnings estimate for Honeywell from $1.68 to $1.63 a share. He said anecdotal evidence points to further weakening in Honeywell's key end markets, including aerospace, housing and automotive.
