Honeywell International Inc. (HON - Free Report) 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 - Free Report) . 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.