- Price
- $163.56
- Fair value
- $256.00
- Discount
- 36.1%
- Uncertainty
- Medium
- LSEG rating
- 2.56
- Moat
- Wide
- Next earnings
- 2026-11-05
- Next earnings is estimate
- Yes
- Company name
- Honeywell Aerospace
- Sector
- Aerospace systems & defense electronics
- About
- Honeywell Aerospace makes equipment and parts for aircraft and spacecraft. Its main product lines are avionics and navigation systems, engines and auxiliary power units, and aircraft control systems, plus satellite communication products, including laser links. Aircraft makers like Airbus and Boeing, and business jet makers, buy this equipment new as original equipment (OE), a lower-margin sale. Once the equipment is installed, Honeywell then earns higher-margin, recurring revenue for decades by selling replacement parts, repairs, and overhauls, called the aftermarket. A separate Defense and Space segment sells to the US and allied militaries. Honeywell Aerospace became an independent public company on June 29, 2026, when Honeywell International, renamed Honeywell Technologies (ticker HON), spun it off. This followed Honeywell's earlier spin-off of Solstice Advanced Materials (ticker SOLS) on October 30, 2025, completing a three-way breakup that left Honeywell Technologies as a smaller, pure-play automation company. Honeywell Aerospace is headquartered in Phoenix, Arizona, employs more than 36,000 people, serves more than 10,000 customers worldwide, and joined the S&P 500 and S&P 100 the day it began trading.
- Thesis
- At $163.56, Honeywell Aerospace trades about 36% below the analysts' $256 fair value estimate. Most of that gap opened on August 5, 2026, when the company's first earnings report as an independent 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 blamed a shortage of castings, forgings, and other mechanical parts from a small slice of its supplier base, and the stock fell as much as 24% in a single day, to a 52-week low of $150.03. CEO Jim Currier admitted he had underestimated how long the fixes would take. The market is now pricing in doubt about whether a brand-new standalone company, carrying about $16 billion of debt issued to fund its own spin-off and paying no dividend yet, can execute a supply chain turnaround that has no track record to judge it by. But management says the problem is supply, not demand: orders grew 8% in the quarter, the backlog stands around $18 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 IndiGo picked Honeywell avionics and auxiliary power units for more than 800 A320-family aircraft in 2026, called the largest such win in company history, and management reaffirmed its 2030 financial targets from its investor day despite the near-term guidance cut. If the supply constraints ease through 2027 as planned and the deferred aftermarket revenue comes through, the discount 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 turn negative, and the company simply has no earnings history yet as an independent business, so investors have nothing to fall back on if the supply chain fix again takes longer than promised.
- 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.
- Recent events
- 2026-09-14: 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.
2026-09-01: A company director bought 6,400 Honeywell Aerospace shares at $156.00 each, an open-market insider purchase.
2026-08-12: 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.
2026-08-05: 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.
2026-06-29: 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.
2025-10-30: 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.