HON heads into its October 22 earnings with short interest climbing and options traders leaning bullish, a split in positioning that makes the setup worth watching closely.
The most notable shift in the lending market is the pace of short-interest growth. Shorts against Honeywell rose roughly 14% over the past week to 1.25% of the free float, continuing a build that has lifted the position by about 8% over the past month. The absolute level remains low: just under 8 million shares borrowed against a float of hundreds of millions. Yet the direction is consistent. Looking at the daily history, the step-change came around September 22, when shares short jumped from roughly 7 million to above 8 million and have held there. Borrowing costs have also moved higher, rising 22% on the week to 0.51%, though they remain cheap in absolute terms. Availability is still extremely loose at more than 2,200%, meaning there are many multiples more shares available to borrow than are currently out on loan, so there is no squeeze pressure here. The ORTEX short score has drifted up from 31.3 in mid-September to 33.7 now, a modest but steady drift that mirrors the directional move in shares short.
Options positioning, by contrast, tells a more constructive story. The put/call ratio closed the week at 0.30, well below its 20-day average of 0.33 and near the lower end of its 52-week range (52-week low is 0.24, high is 0.91). The reading is roughly 0.8 standard deviations below the recent mean, placing options traders in a relatively call-heavy posture. That diverges clearly from the direction of short interest: one cohort is adding downside exposure while another is adding upside exposure into the same October 22 event.
The Street's collective view leans positive, though recent analyst activity has been more cautious than constructive. Wells Fargo initiated coverage last week at Equal-Weight with a $231 target, below the current stock price of $210 but suggesting limited near-term upside in their view. Morgan Stanley maintained Equal-Weight while raising its target modestly to $250 at the end of August. RBC Capital actually trimmed its target to $293 from $298 in mid-August while keeping an Outperform. The pattern across recent months is that bulls are pulling targets higher after the strong July quarter but neutral shops are anchoring near current levels. The mean analyst target of $259 implies roughly 23% upside from $210, a gap that reflects genuine disagreement rather than consensus conviction. On valuation, the forward PE sits at 22.2x, down about 0.4 points over the past month, with EV/EBITDA at 18.4x, also drifting lower. Honeywell ranks at the 98th percentile for EPS surprise, meaning it has an exceptional track record of beating estimates. The analyst recommendation factor score is at 100, the highest possible reading, reflecting broad coverage skewed toward positive ratings. EPS momentum scores over the past 30 and 90 days are weak at 19 and 22 respectively, suggesting near-term estimate revisions have been heading lower even as the long-run bull case remains intact.
The bull and bear cases are well-articulated by the Street. Bulls point to an aerospace-led portfolio restructuring, strong orders momentum (Process Automation and Technology orders up 24% in the most recent quarter), raised EPS guidance of $8.05 to $8.35, and a management plan to grow recurring software and services revenue from about 40% to above 45% of the mix. Bears flag the remaining exposure to cyclical end markets including commercial aerospace, oil and gas, and general industrial demand, a still-elevated portfolio-transition burden, and a tax-rate headwind that weighed on the Q2 guide. The near-term execution risk around stranded costs and debt paydown to roughly 3x gross leverage by year-end is the most concrete bear concern.
The earnings history provides the clearest relevant data point. Honeywell's Q2 2026 print on July 23 produced a one-day gain of 4.4% and a five-day gain of 3.8%, a strong post-results move that came after a period when the stock had lagged peers. The stock has since given back those gains and more, down 3.4% over the past month to $210.13.
With 22 days to the October 22 report, the key tension is whether the building short interest reflects a view that the July quarter's gain was a relief rally the stock cannot repeat, or simply quarter-end positioning mechanics. The divergence between call-heavy options flow and rising short interest is the metric worth watching as the date approaches.
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