As investors prepare for the Monday spinoff of Honeywell's (HON) aerospace division, RBC Capital Markets is already taking a bullish view on the new company. The firm, led by five-star analyst Kenneth Herbert, initiated coverage of Honeywell Aerospace (HONA) with a Buy rating before its first day of trading. RBC also set a $300 price target and argued that the new aerospace and defense business is not being fully appreciated by investors.

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For reference, Honeywell Aerospace's "when-issued" stock (HONAV), which functions as a conditional market for shares that have been approved but not yet officially distributed, is currently trading at $210 per share. The spinoff is important because Honeywell Aerospace will give investors a more direct way to own the company's aviation and defense unit. RBC appears to be the first major Wall Street firm to launch coverage on the newly separated business, which could help shape early investor sentiment.

In addition, the bullish rating suggests that analysts see room for the standalone aerospace company to earn a higher valuation once it trades independently. It is worth noting that spinoffs can sometimes unlock value that was harder to see inside a larger industrial conglomerate. The key question now is whether investors agree that the new company's aerospace and defense assets deserve a higher standalone valuation.

Is HON Stock a Good Buy?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on the pre-spinoff Honeywell shares based on nine Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average HON price target of $251.54 per share implies 9.7% upside potential.