Honeywell Aerospace (HONA) officially became an independent, publicly traded company on June 29, 2026, and Wall Street has already made up its mind on the stock.
The company separated from Honeywell International on June 29, 2026, and landed on the Nasdaq as HONA.
The parent kept the HON ticker and now operates as Honeywell Technologies.
On Monday, July 6, 2026, Jim Cramer told viewers HONA had more room to run than Boeing or GE Aerospace. A day later, Morgan Stanley opened coverage with an Equal-weight rating.
The bank’s outlook aligned with the market consensus that the company is a high-quality business currently trading at a fair price with limited immediate growth potential.
Let’s see what that means for investors.
Morgan Stanley starts Honeywell Aerospace at equal-weight
Analyst Kristine Liwag initiated coverage of Honeywell Aerospace on July 8 with an equal-weight rating and a $255 price target, Investing.com reported.
Equal-weight is the bank’s neutral call, meaning it expects the stock to track the rest of its aerospace coverage over the next 12 to 18 months.
Morgan Stanley is roughly the 10th firm to rate HONA since the spinoff, and its $255 target now sits just below a $263.50 consensus.
Wells Fargo and TD Cowen both landed at $250, Jefferies went with $235, and RBC is the outlier at $300. HONA closed Wednesday at $224.35, according to Yahoo Finance.
Honeywell Aerospace began trading independently on the Nasdaq under the ticker HONA on June 29, 2026tupungato / Getty Images
Reasoning behind Morgan Stanley’s rating
Liwag’s team is not disputing the business. Honeywell Aerospace runs a “develop once, deploy everywhere” model. It builds a technology once and sells into commercial jets, business aviation, defense, and space.
That model keeps margins high. Morgan Stanley projects an adjusted operating margin near 25.3% by 2028.
This margin is among the highest in the industry, which the company has led since building the first autopilot in 1914.
Related: History of Honeywell: Company timeline, milestones & facts
However, revenue and operating profit are each forecast to grow about 8% a year in 2028, while peers grow closer to 10.5% and 12.5%.
This means HONA’s margins near the top have little room to expand, and JPMorgan expects them to stay flat.
High margins with slow growth earn a market multiple, not a premium.
The commercial share loss that could shrink Honeywell’s best business
Commercial aftermarket, the parts-and-repair business that pays out for decades after a plane is sold, accounts for about 44% of Honeywell’s sales.
This lucrative revenue stream is only possible because Honeywell won the initial equipment contracts.
Morgan Stanley found Honeywell’s commercial and regional original equipment revenue in 2025 landed roughly 35% to 45% below its 2004 and 2009 levels.
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This happened after the revenue was adjusted for inflation, and the industry delivered far more aircrafts.
Rivals moved the other way. TransDigm (TDG) has said its content on the Boeing 787 climbed more than 35%. Collins, now part of RTX, also doubled content on new-generation jets.
Older planes retire, and if Honeywell has less equipment on the jets replacing them, the aftermarket annuity shrinks quietly.
The defense budget does the heavy lifting for HONA bull case
Defense and space contributed about 41% of 2025 revenue, and that is where the near-term momentum is.
Honeywell holds content on 11 of the 12 high-priority munitions programs backed by the 2027 budget request. The request proposes roughly tripling missile procurement funding compared to 2026.
The company signed a supplier framework agreement with the Department of War in March.
It also committed $500 million to expand production of navigation systems, Assure missile actuators and electronic warfare hardware, Honeywell Aerospace confirmed.
Not every framework agreement converts on schedule, and defense revenue moves with appropriations and export licenses.
How Honeywell Aerospace could reach $355
Morgan Stanley published three scenarios, and the spread is wide.
Bull case, $355: Revenue grows about 10% a year, supply chains normalize, margins expand about 110 basis points, and free cash flow conversion hits roughly 100%.
Base case, $255: Revenue grows about 8%, margins stay flat near 25.3%, and the stock earns a peer-average multiple.
Bear case, $175: Revenue growth slows to about 5%, margins contract, and supply chain bottlenecks bite.
Free cash flow conversion decides the outcome, and the bank forecasts about 93% in 2028 against a competitor benchmark near 97%.
Free cash flow is cash left after operations and capital spending.
Why Cramer and Morgan Stanley disagree about HONA stock
Cramer expects the pullback to continue as institutional investors finish repricing the newly independent company. However, that theory has a complication.
HONA entered the S&P 500 and S&P 100 on its first trading day, S&P Global reported, so index funds had to buy it immediately.
A stock every S&P 500 fund owns is not undiscovered.
While Morgan Stanley focuses on where 2028 earnings will settle, the stock’s strong debut offers little insight into that.
HONA is not a discount at $224, but rather a fairly valued supplier. While backed by a strong defense catalyst, uncertainty remains over the commercial franchise driving the bulk of its profit.
Key metrics to watch include next-gen aircraft content wins and free cash flow conversion across the 2027 and 2028 reports.
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