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Honeywell (HON) Merges Quantum Solutions With Cambridge Quantum

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Honeywell International Inc. (HON - Free Report) yesterday announced that it has combined its Quantum Solutions business with Cambridge Quantum. The business combination was announced in June 2021. The newly created entity, Quantinuum, is the biggest standalone quantum computing company in the world.

Honeywell’s shares declined 2.6% yesterday, ending the trading session at $202.24.

Founded in 2014, Cambridge Quantum is a major independent quantum computing software company, having a wide geographical presence across the United States, Europe and Japan. It is specialized in designing tools and focuses on the commercialization of quantum technologies.

Inside the Headlines

Quantinuum will specialize in providing advanced quantum computer and a complete suite of quantum software. The company’s products and solutions will support customer requirements for enhanced computation in several fields, including drug discovery & delivery, cyber security & encryption, finance, supply chain & logistics and material science.

Quantinuum will have a workforce of 400 people, 300 of whom will be in research and technical fields. The company will have a dual headquarters in Colorado and Cambridge, the United Kingdom. This will facilitate international collaboration with businesses, government agencies, universities and other organizations.

With the completion of the merger, about 54% of the ownership stake in Quantinuum has gone to Honeywell. Along with its decision to invest $270-$300 million into the new company, Honeywell has entered into a long-term deal to facilitate the critical ion traps production needed for powering Quantinuum's trapped-ion quantum hardware.

It’s worth noting that Honeywell has not modified its financial outlook for 2021 on account of the business combination.

Zacks Rank, Price Performance and Estimate Trend

Honeywell, with a $143-billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is set to benefit from strength in the warehouse and workflow solutions business, along with recovery in the commercial aviation business in the quarters ahead. Solid demand for productivity solutions and services and a strong backlog will act as tailwinds. However, weakness across the defense and space business might adversely impact its near-term performance.

Zacks Investment ResearchImage Source: Zacks Investment Research

In the past three months, HON’s shares have lost 12.4% compared with the industry’s decline of 10.9%.

In the past 30 days, the Zacks Consensus Estimate for the company’s earnings has moved down 0.1% to $8.06 for 2021, while the same for 2022 has been stable at $9.04.

Stocks to Consider

Some better-ranked companies are discussed below.

SPX FLOW, Inc. presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Its earnings surprise in the last four quarters was 40.42%, on average.

In the past 30 days, SPX FLOW’s earnings estimates have increased 8% for 2021 and 17.9% for 2022. Its shares have gained 6.5% in the past three months.

Crane Co. (CR - Free Report) presently carries a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 22.02%, on average.

In the past 30 days, Crane’s earnings estimates have increased 1.4% for 2021 and 1.1% for 2022. Its shares have lost 2.5% in the past three months.

Welbilt, Inc. presently carries a Zacks Rank #2. Its earnings surprise in the last four quarters was 172.50%, on average.

Welbilt’s earnings estimates have increased 4.8% for 2021 and 3.4% for 2022 in the past 30 days. Its shares have inched up 0.1% in the past three months.


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