HONA
The upgrade that lit a match
Honeywell Aerospace had one of those mornings where a Wall Street note does most of the heavy lifting. Morgan Stanley upgraded the newly independent aerospace supplier to Overweight from Equal-weight and set a $205 price target, arguing the post-spin-off sell-off has made the stock look like the cheapest large-cap name in its coverage.
Why the market cared
The pitch is pretty simple: yes, HONA has been messy. Yes, revenue and EBIT growth lag some peers. But after a roughly 25% slide since the June 29 spin-off, Morgan Stanley says the valuation is now doing the kind of stretching usually reserved for yoga instructors.
The firm pointed to trading multiples around:
- 16.8x estimated 2028 price-to-free-cash-flow
- 11.4x 2028 EV/EBITDA
That’s a meaningful discount versus aerospace peer medians, and the bank thinks the gap is wide enough to offset near-term execution risk.
The bigger headache in the background
This isn’t happening in a vacuum. HONA just posted its first quarterly results as a standalone company on August 5th, with Q2 sales of $4.52 billion, up 5% organically, plus an $18.2 billion backlog. But supply chain bottlenecks forced management to trim full-year guidance, which is the kind of thing that makes investors reach for the decaf.
CEO Jim Currier basically said the company underestimated how long the fixes would take. The good news: management says the problem is concentrated, with only about 2% of the supply base classified as critical and constrained.
What to watch next
Honeywell Aerospace is trying to do the unglamorous work now:
- dual-sourcing 50 suppliers in the first half of 2026
- planning to add another 50 in the second half
- spending part of a $1 billion capital program on tooling and factory capacity
That’s not exactly blockbuster headline material, but it is the kind of plumbing fix that can decide whether margins eventually show up or keep getting stuck in traffic.
Big picture: Morgan Stanley is betting the market has already punished HONA enough. The stock now has to prove it can turn “cheap” into “cheap for a reason” less often.