Late last week, Honeywell’s (HON) quantum computing subsidiary, Quantinuum, announced it secured a $1 billion partnership with Qatar-based investment firm AI Rabban Capital. The joint venture was announced during President Donald Trump’s Gulf tour alongside massive aerospace and defense contracts totaling $1.2 trillion. The deal should enable Quantinuum to accelerate quantum computing adoption across the oil-rich Gulf region.

The global quantum computing market is experiencing explosive growth, with the total addressable market expected to expand from $1.4 billion in 2024 to potentially $12.6 billion by 2032, indicating a compound annual growth rate of over 30%. This partnership gives Quantinuum a first-mover advantage in a region flush with capital and eager to diversify beyond oil dependence.

Quantinuum’s expansion into Qatar, focusing on precision medicine and genomics, will cater to regional-specific use cases. Qatar will invest $1 billion in quantum technology over the next decades and will enable wider access to Quantinuum systems. 

As quantum computing transitions from experimental technology to commercial reality, Honeywell’s majority stake in Quantinuum could prove to be game-changing over time. With governments worldwide pouring billions into quantum research, this partnership may signal the beginning of Quantinuum’s transformation into a global quantum powerhouse.

Is HON Stock a Good Buy Right Now?

Valued at a market cap of $143 billion, Honeywell is a diversified industrial technology company operating across four main segments: Aerospace Technologies (aircraft systems, engines, avionics), Industrial Automation (sensors, controls, safety equipment), Building Automation (HVAC, security, fire systems), and Energy & Sustainability Solutions (refining technologies, catalysts, specialty materials). 

Honeywell International delivered a strong first-quarter performance that exceeded expectations across all segments. Further, CFO Mike Stepniak expressed confidence in the company's full-year guidance despite ongoing tariff headwinds.

Speaking at the Bank of America Industrials Conference, Stepniak highlighted robust order growth in the first quarter that has continued through April and May. Notably, Honeywell is seeing strength in Building Automation, fire detection systems, and defense markets, with Europe showing promising signs of recovery in short-cycle demand.

Tariffs remain a significant challenge, with an estimated $500 million gross impact that Honeywell is offsetting through pricing actions and supply chain adjustments. Recent tariff reductions have lowered this impact by $100 million, though Stepniak noted some customer hesitation in investment decisions, particularly in businesses with China exposure.

The planned three-way breakup of Honeywell continues to progress, with management believing that separate entities will allow for focused capital allocation and innovation strategies tailored to each segment’s specific needs. The Advanced Materials business, which will be spun out as Solstice Advanced Materials by year-end, is expected to benefit from demand for specialty chemicals. 

Stepniak emphasized Honeywell’s shift toward a more conservative planning philosophy focused on leading indicators and high-confidence deliverables, positioning Honeywell for both short-term performance and long-term growth.

Is Honeywell Stock Undervalued?

Wall Street expects Honeywell’s revenue to increase from $38.5 billion in 2024 to $49.7 billion in 2029. Comparatively, adjusted earnings are forecast to expand from $9.89 per share in 2024 to $14.65 in 2029. A widening earnings base is expected to help the industrial heavyweight grow its dividends from $4.37 per share to $7 per share over the next five years. 

Honeywell stock currently trades at a forward price-earnings multiple of 21.2x, higher than the 10-year average of 20.2x. If HON stock trades at 20x forward earnings, it will be priced around $295 in early 2024, above the current price of $222. 

Out of the 22 analysts covering HON stock, 12 recommend “Strong Buy” and 10 recommend “Hold.” The average target price for the blue-chip stock is $238.60, indicating upside potential of 6.3% from the current price.