Honeywell Aerospace (HONA) guidance cut triggers 28% collapse, Cramer Charitable Trust exits at the open
A guidance cut tied to supply-chain constraints sent Honeywell Aerospace Inc. (NASDAQ: HONA) down nearly 28% between August 4 and August 6, and Jim Cramer's Charitable Trust unloaded the entire position at the opening…
Key takeaways
- Honeywell Aerospace (NASDAQ: HONA) fell nearly 28% between August 4 and August 6 after cutting guidance tied to supply-chain constraints.
- Jim Cramer's Charitable Trust sold its entire HONA position at the opening bell on August 6, with Cramer calling management's failure to communicate the deterioration early 'a rookie mistake.'
- Management cut organic growth guidance to 4%-5% from 7%-9% and lowered pro forma standalone adjusted EBIT to $4.35 billion-$4.45 billion from $4.65 billion-$4.75 billion.
- Second-quarter revenue rose 5% year-over-year to $4.52 billion, but adjusted earnings of $1.87 per share missed consensus as core profit fell 7%.
- Jefferies cut its price target to $175 from $235 and maintained a Hold rating, finding no near-term catalyst for supply-chain remediation or trust-rebuilding.
A guidance cut tied to supply-chain constraints sent Honeywell Aerospace Inc. (NASDAQ: HONA) down nearly 28% between August 4 and August 6, and Jim Cramer's Charitable Trust unloaded the entire position at the opening bell on August 6. Cramer, speaking that evening on Mad Money, called management's failure to communicate the deterioration early "a rookie mistake." The next catalyst in focus: whether management provides any updated supply-chain timeline that could restart the clock on the company's 2030 targets.
The guidance numbers
The revisions were steep. Management realigned full-year forecasts with supply-chain capacity, cutting organic growth guidance to 4%-5% from a prior range of 7%-9%. Pro forma standalone adjusted EBIT was lowered to $4.35 billion-$4.45 billion, down from $4.65 billion-$4.75 billion, and year-over-year adjusted EBIT growth guidance fell to flat to 3% from 7%-10% previously.
The second-quarter print offered no offset. Revenue of $4.52 billion represented a 5% year-over-year increase, but adjusted earnings of $1.87 per share missed consensus. Separation-related costs and inventory obsolescence charges contributed approximately $100 million in headwinds, pushing core profit down 7%. The driver: a prioritization of original equipment manufacturer deliveries to Boeing and Airbus that crowded out the higher-margin aftermarket segment right out of the gate.
The setup at current levels
At approximately 21x forward earnings, short interest sits near 2.6% of float. Jefferies dropped its price target to $175 from $235 and maintained a Hold rating, noting the scale of the guidance cut was unpredictable for a company completing its first quarter as a standalone public entity. The firm flagged supply-chain remediation and trust-rebuilding as the two variables that determine whether the 2030 plan remains intact, and found no near-term catalyst on either front.
Cramer said he called management directly and received a call back. He characterized the outcome as "very suboptimal," and noted that CNBC's Phil LeBeau said repeatedly that management could have disclosed the deterioration sooner. A lower multiple does not resolve the credibility gap.
What to watch
Any management update on the supply-chain timeline is the next printable event for HONA. Absent that, Jefferies sits at $175 with a Hold, and the 2030 targets remain open items on the tape.
Related reading
Filed via finance.yahoo.com