HONA changes
Pick any two versions below to diff them.
- Price
- $163.56 → $158.78(−2.9%)
- Thesis
- removed: At $163.56, Honeywell Aerospace trades below the analysts' intrinsic value. Most of removed: that gap added: the discount opened on added: a single day, August 5, removed: 2026, when the company's added: 2026. That day, Honeywell Aerospace cut its first removed: earnings report added: full-year guidance as an independent removed: public company cut full-year 2026 organic sales growth guidance to 4%-5% from 7%-9%, and cut adjusted EBIT guidance by roughly $300 million at the midpoint, to $4.35-$4.45 billion. Management added: company. It blamed a shortage of castings, forgings, and other mechanical parts from a small removed: slice added: group of removed: its supplier base, and the added: suppliers. The stock fell as much as 24% removed: in a single day, to a 52-week low of $150.03. CEO Jim Currier admitted he had underestimated added: that day. A securities class action lawsuit filed weeks later argues management understated how removed: long added: bad the removed: fixes would take. added: shortage was. The removed: market is now pricing in doubt added: company also carries about removed: whether a brand-new standalone company, carrying about $16 billion of debt removed: issued to fund added: from its own spin-off and removed: paying added: pays no dividend removed: yet, can execute added: yet. That leaves little financial room for a added: further setback. The gap can close if the supply removed: chain turnaround that has no track record to judge it by. But added: shortage eases as management removed: says the problem is supply, not demand: orders added: now expects. That would let deferred aftermarket revenue, Honeywell's highest-margin business, reach customers. Orders still grew 8% in the removed: quarter, added: most recent quarter and the backlog stands around $18 removed: billion, and commercial aftermarket sales, Honeywell's highest-margin and most recurring business, still grew 8% even while parts shortages held back shipments. India's added: billion. So the case rests on supply catching up with demand, not on demand itself. A large order win, like the 2026 IndiGo removed: picked Honeywell avionics removed: and auxiliary power units for added: deal covering more than 800 removed: A320-family aircraft added: aircraft, needs to keep showing up in removed: 2026, called the largest such win added: revenue rather than staying stuck in removed: company history, and management added: the backlog. Management has reaffirmed its 2030 removed: financial targets from its investor day despite added: targets, but investors have no multi-year standalone track record to check that against yet. Honeywell Aerospace is expected to report third-quarter 2026 results in early November 2026. That is the removed: near-term guidance cut. added: next chance to show supply is improving. If the removed: supply constraints ease through 2027 as planned added: shortage eases and the removed: deferred aftermarket revenue comes through, added: pending class action does not produce a large judgment, the discount removed: can close. The honest counter-case: Wall Street's own opinion has started to split, with Melius Research cutting its rating to Hold in September 2026 even as Susquehanna started coverage positively on worry that the pace of improvement could removed: turn negative, and the company simply has no earnings history yet as an independent business, so investors have nothing added: start to removed: fall back on if added: close over the removed: supply chain fix again takes longer than promised. added: next three to five quarters, not before 2027.
- Risks
- A shortage of mechanical parts, such as castings, forgings, and bearings, from a small number of suppliers forced Honeywell Aerospace to cut its full-year 2026 sales growth guidance from 7%-9% to 4%-5%, and cut adjusted EBIT guidance by roughly $300 million, in its very first quarter as a public company. The CEO has already admitted he misjudged how long the fix would take once. Honeywell Aerospace issued about $16 billion of senior notes to fund its own spin-off from Honeywell Technologies, and pays no dividend yet as of September 2026. This debt load leaves less room to absorb a further supply chain delay or a slowdown in aircraft or defense demand. The company has no earnings history as an independent business before its August 2026 debut report. Investors cannot yet check management's guidance and cost estimates against a multi-year standalone track record. The parts shortage pushed Honeywell Aerospace's mix toward lower-margin original equipment and domestic defense sales, and away from its higher-margin commercial aftermarket and international defense business. If that mix does not recover once supply improves, margins stay under pressure. Revenue depends on aircraft production rates at Boeing and Airbus, airline flight activity, and US and allied defense budgets, none of which Honeywell Aerospace controls. A slowdown in any of these would slow growth further on top of the current supply problem. added: A securities class action (Green v. Honeywell Aerospace Inc., filed in the District of Arizona) alleges the company misled investors about supplier concentration risk and did not disclose a DOJ cybersecurity investigation before its August 2026 guidance cut. The case is at an early stage, with a lead-plaintiff deadline of November 23, 2026, but an adverse outcome could add legal costs and management distraction on top of the supply-chain problem.
- Recent events
- Sep added: 24, 2026: A securities class action, Green v. Honeywell Aerospace Inc. (D. Ariz., No. 26-cv-06779), was announced on behalf of investors who bought shares between June 29 and September 1, 2026. It alleges Honeywell Aerospace made false or misleading statements about supplier concentration risk and did not disclose the DOJ cybersecurity investigation before its August 5, 2026 guidance cut. The lead-plaintiff deadline is November 23, 2026. Sep 14, 2026: Melius Research downgraded Honeywell Aerospace to Hold from Buy and cut its price target to $190, citing worry that the rate of change in its fundamentals and valuation could turn negative. Sep 1, 2026: A company director bought 6,400 Honeywell Aerospace shares at $156.00 each, an open-market insider purchase. added: Sep 1, 2026: The US Department of Justice announced that Honeywell Aerospace agreed to pay more than $2 million to settle False Claims Act allegations that it failed to comply with cybersecurity requirements in a US Department of Defense contract. Aug 12, 2026: Honeywell Aerospace completed an exchange offer, swapping about $16 billion of unregistered senior notes issued for the spin-off into registered notes, with 98% or more of each series tendered. Aug 5, 2026: Honeywell Aerospace reported its first quarterly results as an independent public company: Q2 2026 revenue of $4.52 billion, up 5% organically, but full-year 2026 guidance was cut on supply chain constraints. Shares fell as much as 24% the next trading day, to a 52-week low of $150.03. Jun 29, 2026: Honeywell Aerospace completed its spin-off from Honeywell Technologies and began trading on Nasdaq as HONA, joining the S&P 500 and the S&P 100 the same day. Oct 30, 2025: Honeywell completed the spin-off of Solstice Advanced Materials (ticker SOLS), the first of the two spin-offs that separated Honeywell into three independent companies.