Shares of Honeywell Aerospace Inc (NASDAQ:HONA) are trading higher Wednesday morning after Morgan Stanley analyst Kristine Liwag upgraded the stock to Overweight from Equal-weight with a $205 price target. Here’s what investors need to know.
- Honeywell Aerospace shares are powering higher. What’s driving HONA stock higher?
Morgan Stanley Sees Opportunity
Shares have dropped around 25% following the company’s June 29 spin-off, which Morgan Stanley believes creates a prime entry point given heavily discounted valuation multiples.
Morgan Stanley noted that HONA is now the cheapest large-cap aerospace name in its coverage, trading at ~16.8x estimated 2028 price-to-free-cash-flow and ~11.4x 2028 EV/EBITDA, discounts of 35% and 38% relative to aerospace peer medians.
While acknowledging HONA trails peers in revenue and EBIT growth, the firm stressed that current valuation discounts far outweigh near-term execution risks.
What Honeywell Aerospace Does, Q2 Earnings and Management Commentary
Honeywell Aerospace is a pure-play aviation supplier that manufactures propulsion engines, cockpit avionics, flight software and defense electronics across commercial, business and military markets worldwide.
During its inaugural quarterly earnings report as an independent company on Aug. 5, Honeywell Aerospace posted second-quarter sales of $4.52 billion, up 5% organically, alongside an $18.2 billion order backlog. However, lingering supply chain bottlenecks constrained production and led management to trim full-year guidance.
Addressing the friction during the earnings call, CEO Jim Currier admitted, “Frankly, I underestimated how long it would take to implement and see traction from the corrective measures we had taken and are taking”.
Currier emphasized that execution issues remain localized, noting “critical and constrained suppliers represent roughly 2% of our supply base”.
In aerospace manufacturing, small bottlenecks disproportionately delay high-margin output. Currier noted a past-due backlog of just $15 million from a single component vendor can temporarily hold back hundreds of millions of dollars in finished aircraft systems.
To eliminate these choke points, Honeywell Aerospace dual-sourced 50 suppliers in the first half of 2026 and plans to add another 50 in the second half. The company is also deploying part of a $1 billion capital program toward insourcing critical tooling and expanding factory capacity into 2027.
HONA Shares Climb Wednesday Morning
HONA Price Action: Honeywell Aerospace shares were up 5.5% at $169.60 at the time of publication on Wednesday, according to Benzinga Pro data.
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