Our rating, price target and outlook for newly spun Honeywell Aerospace

Key Points:

• Honeywell has completed the spin-off of its aerospace business, with shareholders receiving one share of the new company for every two Honeywell shares, creating a pure-play aerospace firm focused on designing and manufacturing critical aircraft components and defense technologies.
• The new Honeywell Aerospace faces strong demand but supply chain challenges, holding a record $19 billion backlog, and reported fiscal 2025 sales of $17.4 billion with 12% organic growth and $4.3 billion in adjusted EBITDA.
• Management aims for 6% to 8% annual organic revenue growth from 2025 to 2030, driven by commercial aftermarket, defense and space, and commercial original equipment markets, supported by streamlined operations and strategic acquisitions.
• The company’s integrated approach to R&D and supply chain management enables faster product development and cost efficiencies, differentiating it from competitors like Raytheon and GE Aerospace, with a current valuation at 23.1 times forward earnings.
• Analysts are optimistic about Honeywell Aerospace’s growth potential and stock performance, initiating coverage with a buy rating and a price target of $285, citing strong backlog, focused management, and market demand.