Honeywell Boosts 2025 Earnings Forecast Despite Spinning Off Solstice Amid Strong Aerospace Sales

Honeywell (NYSE: HON) surprised on the upside Thursday by lifting its adjusted earnings per share forecast for 2025, even after factoring in the upcoming spin-off of its advanced materials division, Solstice. The company's sturdy aerospace segment sales and easing supply chain issues have powered this boost.

The spinoff, which is on track to start trading independently on Nasdaq October 30, is part of Honeywell's broader strategy to split into three standalone companies. This move aims to let each business focus on its core strengths, with the remaining Honeywell concentrating on automation.

In the third quarter, Honeywell recorded a 7% rise in overall sales to $10.41 billion, outpacing analyst predictions. Its adjusted earnings per share hit $2.82, comfortably above the forecasted $2.57. The aerospace unit, the largest revenue contributor, pulled ahead with a 15% sales jump to $4.51 billion, signaling steady demand as aircraft manufacturers ramp up output to meet soaring jet orders.

One dynamic at play is the ongoing shortage of new aircraft, which has kept the maintenance, repair, and overhaul business busy. Airlines are holding onto older planes longer, and that's adding revenue to Honeywell's aerospace services. The company expects the aerospace segment to be carved out in the latter half of 2026, enabling a sharper focus on its other industrial sectors.

While the automation division faced some headwinds in the quarter - sales slid 9% to $2.27 billion amid higher costs and sluggish demand - CEO Vimal Kapur will be steering the post-spinoff Honeywell through efforts to revitalize this laggard arm.

Despite the drag from the upcoming Solstice separation, which is expected to knock 21 cents off adjusted EPS, Honeywell now forecasts full-year adjusted earnings per share between $10.60 and $10.70, notably above its previous guidance range of $10.24 to $10.44.

Investors have responded positively so far, with shares jumping nearly 5% in early trading, reflecting confidence in Honeywell's growth trajectory and strategic restructuring drive. As these changes unfold, it will be interesting to see how the market values the nimble, unit-focused businesses emerging from Honeywell's split.