Honeywell Aerospace Upgraded to Overweight by Morgan Stanley, Shares Rise

Honeywell Aerospace shares traded higher Wednesday morning after Morgan Stanley analyst Kristine Liwag upgraded the stock from Equal Weight to Overweight with a $205 price target. Here's what investors need to know.

Honeywell Aerospace stock is climbing sharply. What's driving HONA shares higher?

Morgan Stanley Sees Opportunity

Following the company's June 29 spinoff, shares have fallen roughly 25%, which Morgan Stanley believes creates a compelling entry point amid a significant valuation multiple discount.

Morgan Stanley noted that HONA is now the cheapest large-cap aerospace company in its coverage, trading at approximately 16.8 times projected 2028 free cash flow and 11.4 times 2028 enterprise value/EBIT, representing discounts of 35% and 38%, respectively, versus the aerospace peer median.

While acknowledging that HONA lags peers in revenue and EBIT growth, the firm emphasized that the current valuation discount more than compensates for near-term execution risk.

Honeywell Aerospace's Business, Q2 Earnings, and Management Commentary

Honeywell Aerospace is a pure-play aviation supplier, manufacturing propulsion engines, cockpit avionics, flight software, and defense electronics across global commercial, business, and military markets.

In its first quarterly report as a standalone company on August 5, Honeywell Aerospace posted second-quarter sales of $4.52 billion, up 5% organically year over year, with a backlog of $18.2 billion. However, persistent supply chain bottlenecks constrained capacity, prompting management to lower full-year guidance.

During the earnings call, CEO Jim Currier acknowledged the challenge, stating, "Frankly, I underestimated how long it would take to implement and see the effects of the corrective actions we have taken and are taking."

Currier emphasized that execution issues remain localized, noting that "critical and constrained suppliers represent about 2% of our supply base."

In aerospace manufacturing, small bottlenecks can disproportionately delay high-margin output. Currier noted that an overdue backlog of just $15 million from a single component supplier could temporarily hold up hundreds of millions of dollars in finished aircraft system deliveries.

To address these constraints, Honeywell Aerospace dual-sourced 50 suppliers in the first half of 2026 and plans to add 50 more in the second half. The company is also deploying part of a $1 billion capital plan to insource critical tooling and expand plant capacity through 2027.

HONA Stock Rises Wednesday Morning

HONA share performance: Honeywell Aerospace stock was up 5.5% at $169.60 at the time of Wednesday's data release.