Honeywell Ups UAS Scope With Ballard Unmanned Systems Buyout

Zacks Equity Research
·4-min read

Honeywell International Inc. HON yesterday announced that it acquired Southborough, MA-based fuel cell system manufacturer Ballard Unmanned Systems. The financial terms of the transaction have not been disclosed.

It is worth noting here that Honeywell’s share price decreased 0.5% yesterday, ending the trading session at $172.61.

Ballard Unmanned Systems is a wholly-owned subsidiary of Ballard Power Systems Inc. BLDP. The latter, based in Burnaby, Canada, engages in the manufacturing and selling of proton exchange membrane fuel cell products.

Inside the Headlines

Ballard Unmanned Systems is a privately held company, focusing on manufacturing and providing fuel cell systems (stored hydrogen proton exchange membrane). These fuel-cell systems are used to power unmanned aerial systems (“UAS”) — used mainly for cargo delivery, defense and commercial applications, and energy inspection.

With the buyout, Ballard Unmanned Systems — its equipment, intellectual property, inventory and talented workforce — will be integrated with Honeywell’s Aerospace segment. Notably, the segment engages in providing integrated avionics, engines, systems and service solutions for aircraft manufacturers, airlines, business and general aviation, military, space, and airport operations. The segment’s revenues in second-quarter 2020 were $2,543 million, representing 34% of total revenues generated by Honeywell.

The products/solutions provided by Ballard Unmanned Systems will enhance growth scopes for Honeywell in the UAS market. Going forward, Honeywell wishes to expand its product offerings of fuel-cell systems and also work on opportunities in the aviation market with Ballard Power Systems.

It is worth mentioning here that in order to leverage benefits from the growing opportunities within UAS and urban air mobility (UAM) markets Honeywell formed a new unit — Unmanned Aerial Systems — in June 2020. It also launched SATCOM — the smallest and lightest satellite communication system for unmanned aerial vehicles — in the same month. In September, the company unveiled a research and development lab dedicated to the UAS and UAM markets.

Honeywell’s Buyout Activities

The company believes in acquiring businesses to improve its product lines and market exposure. Apart from Ballard Unmanned Systems, Honeywell acquired Boulder City, NV-based technology firm Rocky Research so far in 2020. (For more information please read: Honeywell's Rocky Research Buyout to Boost Aerospace Business)

In 2019, Honeywell invested $50 million for acquisitions. It added Rebellion Photonics to its portfolio in December, while acquired TruTrak Flight Systems in July. Since the buyout, Rebellion Photonics has been augmenting its portfolio of automation, process technologies and gas detection solutions. TruTrak Flight Systems enhanced the value of Honeywell’s aviation business.

Zacks Rank, Estimate Trend and Price Performance

With a market capitalization of $121.7 billion, Honeywell currently carries a Zacks Rank #4 (Sell). The company’s businesses, especially commercial original equipment, commercial aftermarket and performance materials, are severely impacted by downturns caused by the pandemic. However, strength in defense and safety as well as Intelligrated businesses is a boon.

In the past three months, the company’s shares have gained 12.7% compared with the industry’s growth of 10.6%.




 

Meanwhile, the Zacks Consensus Estimate for its earnings has been decreased by 2% to $1.48 for the third quarter of 2020 and by 0.6% to $6.88 for 2020 in the past 60 days. However, the consensus estimate for 2021 has been increased by 0.1% to $7.71 during the same timeframe.

Honeywell International Inc. Price and Consensus

 

Honeywell International Inc. Price and Consensus
Honeywell International Inc. Price and Consensus

Honeywell International Inc. price-consensus-chart | Honeywell International Inc. Quote

Stocks That Warrants a Look

Two better-ranked stocks in the industry are ITT Inc. ITT and Danaher Corporation DHR. While ITT currently sports a Zacks Rank #1 (Strong Buy), Danaher carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, bottom-line estimates for the two companies have improved for the current year. Further, earnings surprise for the last reported quarter was 58.33% for ITT and 35.85% for Danaher.

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.

Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Honeywell International Inc. (HON) : Free Stock Analysis Report
 
ITT Inc. (ITT) : Free Stock Analysis Report
 
Danaher Corporation (DHR) : Free Stock Analysis Report
 
Ballard Power Systems, Inc. (BLDP) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research