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The 'Shameful Double Downgrade' of Honeywell: A Wake-Up Call for Investors

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  Published in Stocks and Investing on Tuesday, November 18th 2025 at 13:12 GMT by CNBC

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Ignore the Streets: Why the “Shameful Double Downgrade” of Honeywell is a Wake‑up Call for Investors

On November 18 th, CNBC published a provocative piece that calls out the recent “double downgrade” of Honeywell International Inc. (NYSE: HON) by a prominent analyst – commonly referred to in the story as “Cramer.” The article frames the downgrade not simply as a negative rating, but as a “shameful” misstep that underscores the broader problem of over‑reliance on street analysts for investment decisions. In this summary, we unpack the article’s main arguments, the context behind the rating change, and the implications for both Honeywell and the wider market.

1. The “Double Downgrade” Explained

Honeywell is a diversified industrial conglomerate with operations spanning aerospace, building technologies, safety & security, and performance materials. Its business model has long been praised for its resilience in cyclical economic conditions, owing to its mix of high‑margin, technology‑driven products and a steady stream of government contracts.

The article highlights that the analyst in question first downgraded Honeywell from “buy” to “hold” on a prior earnings call. Just weeks later, after the company released its latest quarterly results, the analyst issued a second downgrade to “sell.” The “double” nature of the action – a downgrade followed immediately by a further cut – prompted the author to describe it as “shameful” and indicative of a lack of disciplined research.

2. The Analyst’s Rationale

Cramer’s public statements, as quoted in the CNBC piece, focused on a few key points:

• Rising Costs: Honeywell’s operating costs had increased in the last quarter, driven primarily by raw‑material price spikes and higher labor costs in its aerospace division.
• Commodity‑Price Risk: The analyst warned that the company’s exposure to commodity price volatility could erode future margins, especially if the economic recovery stalls.
• Competitive Pressure: Honeywell faces intense competition from lower‑priced Chinese manufacturers and other U.S. defense contractors.

While these concerns are not unfounded, the article argues that the analyst failed to account for Honeywell’s hedging strategies, long‑term government contracts, and its recent investments in autonomous aircraft and green‑energy technologies – all of which have the potential to offset short‑term cost pressures.

3. A Critique of Street‑Analysis Culture

The author uses the Honeywell downgrade as a case study to critique what they call the “street‑analysis culture” – the phenomenon in which institutional and retail investors alike follow analyst ratings as the primary decision‑making guide. Key points raised include:

• Over‑Weighting Short‑Term Metrics: The article points out that many street analysts prioritize quarterly earnings and short‑term cash flow over longer‑term capital‑expenditure (CapEx) plans, which are crucial for a company like Honeywell.
• Information Lag: Analysts often base their ratings on the latest financial statements, which may lag a month or more behind the actual economic reality. By the time a downgrade is issued, the market has already moved on.
• Confirmation Bias: The author suggests that some analysts, in their eagerness to maintain credibility, will interpret ambiguous data as negative, thereby contributing to a negative feedback loop that can depress a stock’s price unnecessarily.

4. Honeywell’s Defensive Profile

The article contrasts the analyst’s critique with Honeywell’s robust fundamentals:

• Revenue Diversification: Honeywell’s revenue streams come from 12 distinct business lines, with a significant portion tied to defense and aerospace contracts that are often locked in for multi‑year periods.
• Capital Efficiency: The company has maintained a disciplined CapEx program, focusing on high‑return projects such as the development of the “Aviation Systems” platform and the “Smart Building” suite.
• Balance Sheet Strength: Honeywell’s debt‑to‑equity ratio remains low, providing ample flexibility to weather short‑term commodity spikes.

The author argues that these factors provide a cushion that the analyst’s downgrade fails to consider, implying that the stock may be undervalued relative to its intrinsic worth.

5. Investor Take‑Away: Diversify and Do Your Own Homework

The article concludes with a set of practical suggestions for investors who are wary of following street analyst calls:

1. Cross‑Check Multiple Sources: Compare the rating with the company’s own guidance and with research from independent agencies that may have a different methodology.
2. Focus on Fundamentals: Look beyond quarterly earnings to metrics such as free‑cash‑flow yield, operating margin trends, and the company’s strategic pipeline.
3. Consider Macro Context: Remember that commodity‑price swings and defense spending cycles can affect short‑term results but may not alter the long‑term trajectory of a diversified industrial conglomerate.
4. Watch the Management Team: Honeywell’s executive leadership has a track record of executing on its strategic vision, which should give investors some confidence in the company’s future direction.

6. Broader Market Implications

While the article zeroes in on Honeywell, it also touches on a broader trend: the increasing prevalence of “negative” sentiment in equity research during periods of market stress. The author warns that a wave of downgrades can create a self‑fulfilling prophecy, where the negative sentiment drives a stock lower, triggering more negative coverage, and so on. The piece ends by urging readers to stay grounded in hard data and to avoid falling into the “market sentiment trap.”

Bottom Line

The CNBC article is not merely a complaint about a single analyst’s decision; it is a broader critique of how much weight investors give to street research in making investment choices. By dissecting the “double downgrade” of Honeywell, the piece illustrates that analysts can sometimes overlook the structural resilience of a company, especially when faced with short‑term headwinds. For investors, the takeaway is clear: do your own homework, focus on fundamentals, and remember that a single rating is just one piece of a much larger puzzle.