Honeywell (NASDAQ:HON) has agreed to pay a lump sum of $1.33 billion to end its funding obligations to the North American Refractories Asbestos Personal Injury Settlement Trust. The settlement will enable the company to overcome asbestos-related headwinds and reduce environmental liabilities.
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Upon completion, the manufacturing and technology conglomerate expects to record a charge related to the settlement of obligations in its balance sheet, in place of a $695 million reserve that was present as of September 30, 2022. The deal still requires approval from the Bankruptcy Court for the Western District of Pennsylvania.
The trust was formed after Honeywell’s former subsidiary, North American Refractories Company (NARCO), filed for bankruptcy in 2002. The unit had faced several lawsuits from people who were exposed to asbestos-containing products manufactured and sold by NARCO.
Notably, Honeywell does not expect the deal to have an impact on its full-year 2022 and fourth-quarter earnings outlook provided earlier.
Is Honeywell a Buy?
Wall Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on nine Buys and four Holds. The average HON stock price target of $208.38 implies downside potential of 2.87%.
