Honeywell Aerospace shares plunged as much as 26% on Thursday following the company's announcement of supply-chain problems and weaker-than-expected forecasts. According to reports from Reuters, the stock was last down about 20% and headed for its worst session since its recent listing. The aerospace supplier, which began trading on the Nasdaq about a month ago following its spinoff from Honeywell, faced significant market pressure as investors reacted to the disappointing outlook. Latest market data shows the stock has declined further, with the company now trading at significantly reduced levels as investors continue to digest the supply chain challenges.
The company significantly reduced its 2026 organic sales-growth outlook to 4%-5% from the previous 7%-9% range. As reported by Reuters, Honeywell Aerospace expects adjusted earnings of $7.60-$7.90 per share for the year, which is significantly below analysts' average estimate of $8.86. The company's second-quarter adjusted earnings declined 32% year over year to $1.87 per share, while revenue grew 5% to $4.52 billion, both results falling short of Wall Street expectations. The disappointing financial performance has contributed to the stock's dramatic decline, with investors questioning the company's ability to meet even the reduced guidance.
According to finance chief Josh Jepsen in an interview with Reuters, the company's forecast reset is based on supply-chain constraints and lack of ramp in supply delivery. The aerospace supplier was forced to prioritise deliveries to Boeing and Airbus over its higher-margin aftermarket business due to supply constraints. J.P. Morgan analysts noted that while the recently disclosed supply-chain bottlenecks have left the company starting behind the curve, the shortfall does not seem insurmountable at this point. The supply chain challenges have proven more significant than initially anticipated, forcing the company to make difficult prioritization decisions that impact its overall business strategy.
JP Morgan reduced its price target from $255 to a Street-low $235, stating that the stock's discount to peers is likely to widen following these results. Jefferies, which had also set a $235 price target, said the company's 4% growth outlook was difficult for investors to reconcile with the strength of the aerospace sector. The brokerage added that repeated disappointments this year could leave investors waiting for clear signs of better execution. The analyst downgrades reflect growing concerns about the company's operational challenges and the sustainability of its revised growth projections in the competitive aerospace market.
