Honeywell Aerospace shares dropped 23% after the newly independent company cut its 2026 revenue and profit guidance, blaming a mechanical-parts supply chain that has been slower to improve. The stock ended the session as the worst performer in the S&P 500 and the Nasdaq 100, only weeks after separating from Honeywell.
Honeywell Aerospace shares fell 23% on Thursday, only weeks into the company's life as a standalone business. The stock ended the day as the worst performer in both the S&P 500 and the Nasdaq 100.
Guidance Cut Triggers Steep Selloff
The company cut its outlook late Wednesday, saying its mechanical-parts supply chain had been slower to improve. It now guides for 2026 revenue growth between 4% and 5%, down from previous guidance of between 7% and 9%. It also cut its EBIT growth outlook to flat to 3% year-over-year, from a prior range of 7% to 10%, and left open the possibility that earnings before interest and taxes would not grow at all this year.
The cut followed second-quarter results that missed estimates: adjusted earnings of $1.87 a share on revenue of $4.52 billion, against a FactSet consensus of $2.12 a share on $4.61 billion in sales.
What Wall Street Analysts Are Saying
Robert Stallard at Vertical Research Partners took a dimmer view, saying the supply-chain problems will not be fixed quickly and that Honeywell Aerospace has less exposure than peers to attractive subsectors such as large commercial engines or missiles. He said the stock's inexpensive valuation could turn out to be a value trap.
Ken Herbert at RBC Capital struck a more constructive tone on valuation and said demand for the company's products remains robust. Still, according to Herbert, the guidance cut spooked investors and left the stock "squarely in the penalty box," adding that it also lacks catalysts for the second half of the year.
A Rocky Start For The New Spinoff
Honeywell spun off Honeywell Aerospace in late June under pressure from activist investors, splitting the former parent to focus on automation while the aerospace unit became a pure-play company. The move followed a trend among industrial companies and other legacy U.S. conglomerates, including the separations at General Electric.
Source: MarketWatch
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