Morgan Stanley Sees Opportunity in Discounted Honeywell Aerospace Stock
Honeywell Aerospace stock is on the rise after Morgan Stanley analyst Kristine Liwag upgraded it to Overweight from Equal-weight, citing a prime entry point due to discounted valuation multiples. HONA shares have dropped around 25% since its June 29 spin-off, making it the cheapest large-cap aerospace name in Morgan Stanley's coverage.
Morgan Stanley noted that Honeywell Aerospace is trading at ~16.8x estimated 2028 price-to-free-cash-flow and ~11.4x 2028 EV/EBITDA, discounts of 35% and 38% relative to aerospace peer medians. While the company trails peers in revenue and EBIT growth, the firm stressed that current valuation discounts far outweigh near-term execution risks.
Honeywell Aerospace's second-quarter sales were $4.52 billion, up 5% organically, alongside an $18.2 billion order backlog. However, supply chain bottlenecks constrained production and led management to trim full-year guidance.