Honeywell (HON) was reluctant in finally pulling the plug on its bid to acquire United Technologies (UTX), and now the manufacturer must prove it can stand on its own.
The Morris Plains, N.J.-based corporation has to show at Wednesday's investor conference in New York that it does not need the $3.5 billion in cost savings stemming from the proposed combination, or a renewed stake in the competitive market of jet-engine producers.
Wall Street seems to think Honeywell is up to the task: Shares were up 3% in midday trading Tuesday, while former suitor UTX moved 3% in the opposite direction.
"I think the Honeywell analyst meeting could be a catalyst to show how they don't need UTX to grow the numbers big," Real Money's Jim Cramer said in an email. And analysts at William Blair, among others, seem to be echoing that sentiment.
"Perhaps the most important element about Honeywell's meeting is how successful the company is in reassuring investors that forward earnings visibility for continued above-average growth is not overly conditioned upon large consolidating acquisitions and that the company's ongoing growth initiatives have significant further runaway over the next few years," William Blair wrote in a Tuesday investment note, pegging Honeywell shares with a $108 12-month price target.
After UTX countered Honeywell in an SEC statement Friday, asserting Honeywell had underestimated antitrust roadblocks that would develop if the merger talks proceeded, Honeywell held firm in its view Tuesday that the deal would have had no trouble crossing the finish line.
"Investors will be keen to understand the extent to which Honeywell believes it can afford to be patient in continuing to ensure investors (as well as potentially affected customers) are able to fully understand its perspectives behind the merits of the merger," the analysts wrote. "They will also be very interested to better understand the company's appetite to consider other alternative larger consolidating mergers should the current proposal with UTX fail to garner strong support from various interested parties."