Morgan Stanley Sees Honeywell Aerospace as Undervalued Gem

Honeywell Aerospace stock surged in premarket trading on Wednesday after Morgan Stanley upgraded it to Overweight from Equalweight, citing undervaluation.

The upgrade comes with a price target of $205.00 per share, representing an approximately 27% increase since the June 29, 2026 spin-off.

Morgan Stanley analyst Kristine Liwag noted that HONA shares have declined by about 27% during this period while the S&P 500 gained around 5%. The company's valuation now stands at approximately 16.8x 2028 P/FCF and approximately 11.4x 2028 EV/EBITDA, significantly lower than peer medians.

Liwag stated that 'the investor debate is increasingly shifting from near-term execution risk to a more fundamental question: what is the company worth, and at what valuation could strategic interest potentially emerge?' However, she acknowledged that fundamental concerns remain, including HONA screening toward the lower end of peers on revenue and EBIT growth.