Honeywell Aerospace Shares Plunge 20% as Supply Chain Constraints Bite

Honeywell Aerospace's shares plummeted 20% to $163.00 after it cut its full-year sales outlook by 2-3 percentage points and earnings guidance by 12.5%. The newly independent aerospace and defense supplier cited persistent supply chain constraints as the reason for the revision.

The company reported second-quarter organic sales of $4.5 billion, up 5% from a year earlier, but investors focused on the downward revision to its outlook. Honeywell Aerospace now expects full-year organic sales growth of 4-5%, down from 7-9%. Adjusted earnings per share are projected at $7.60-$7.90, below the average analyst estimate.

The company's Chief Executive Jim Currier acknowledged that its actions had not kept pace with demand and attributed the shortfall to supply chain constraints affecting a small fraction of its supplier base. He said it was prudent to align guidance with what the supply chain could deliver by the end of the second quarter rather than continuing to forecast based on earlier assumptions.