Safety and productivity solutions provider Honeywell International Inc. (HON) recently revealed that it has agreed to acquire alerting and dispatch communications solutions provider US Digital Designs, Inc. The financial terms of the deal, which is likely to close in the first quarter of 2022, have been kept under wraps.
Following the news, shares of the company gained marginally to close at $209.23 on Monday.
Strategic Impact
With this acquisition, Honeywell’s line of solutions for public safety communications will expand, empowering first responders to respond to adverse situations more quickly.
Post the acquisition, the company will become a part of Honeywell’s Fire and Connected Life Safety systems business. Financially, Honeywell is expected to achieve a return on investment of more than 25% in the next five years.
Management Commentary
The CEO of Honeywell Building Technologies, Doug Wright, said, “Integrating US Digital Designs’ fire station alerting capabilities with Honeywell’s Connected Life Safety Services will allow us to eliminate manual processes and significantly reduce response time. Helping first responders arrive faster on site means potentially saving more lives and providing a higher level of asset protection.”
Price Target
Recently, Deutsche Bank analyst Nicole Deblase reiterated a Buy rating on the stock. The analyst, however, lowered the price target from $246 to $236, which implies upside potential of 12.8% from current levels.
According to the analyst, wider macroeconomic concerns like supply chain issues, inflation and severity of the Omicron variant can be headwinds for the company.
The Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 4 Buys and 6 Holds. The average Honeywell price target of $236.60 implies that the stock has upside potential of 13.1% from current levels. Shares have declined 1.2% over the past year.
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