Morgan Stanley Trims Price Target for Honeywell Aerospace Amid Supply Chain Woes

Morgan Stanley analysts have identified supply chain issues as the main reason behind Honeywell Aerospace's second-quarter miss and reduced outlook. The investment bank cut its price target for Honeywell to $205 from $235, citing execution problems rather than a lack of demand in the attractive end markets.

The production ramp-up that was expected did not materialize due to suppliers' inability to consistently deliver key components. This has resulted in revenue losses and increased costs for factories operating at reduced capacity and incurring additional expenses to work around shortages.

Morgan Stanley compared Honeywell Aerospace's performance with its peers, RTX and GE Aerospace, which showed faster growth last quarter. The bank expects Honeywell's growth to lag behind the peer group through 2028 but maintains an equal-weight rating for the company.