Textron Faces Index Removal Risk as Analysts Cut Targets Before Thursday's Print

TXT is holding up better than most of its aerospace and defense peers this week, but the relative resilience masks a more complicated picture heading into Wednesday's earnings.

Among its closest peers, HXL dropped 11.7% over the past week and DCO fell 7.9%, while CW and MOG.A each shed more than 7%. Textron gained 1.2% over the same period, a notable divergence for a stock that has lagged the sector badly year to date, down roughly 11% in 2026. The standout on the week was peer BBD.B, which added 6%.

The more pressing story, though, is what analysts have done to their targets in the days before Thursday's release. Morgan Stanley's Kristine Liwag cut her price target from $98 to $86 on October 19, keeping an Equal-Weight rating, one week after TD Cowen trimmed from $105 to $100 and Citigroup moved from $99 to $86. All three held their existing ratings rather than downgrading, but the direction of travel is uniform: the consensus mean price target has pulled back to $99.47, still implying around 29% upside from the current price of $76.83, a gap wide enough to reflect genuine disagreement about where the stock belongs rather than a modestly mispriced blue chip.

The bull case centres on valuation. At roughly 10.8x trailing earnings and an EV/EBITDA of 8.0x, Textron trades at a material discount to many defense peers, and the earnings yield ranks in the 71st percentile of the broader universe. Bears can point to weak EPS momentum, with the 30-day and 90-day ranks both sitting below the 32nd percentile, and a short score of 42.5 that has barely moved over the past two weeks, suggesting neither conviction nor a squeeze setup. Short interest is 4.6% of the free float, up roughly 7% over the past month, a moderate build rather than an aggressive one. Borrowing shares remains easy, with availability at 1,270%, far above any level that would constrain new short positions.

A separate catalyst is developing in parallel. ORTEX forecasts a 52% probability that Textron is deleted from the MSCI World, MSCI USA, and related large-cap benchmarks at the November 2026 Quarterly Review, with an announcement expected on November 11 and trades settling November 30. The stock's current market cap of $13.2 billion is 14.3% below the exit line at $89.18. If the deletion is confirmed, index trackers would need to sell an estimated $799 million of MSCI World exposure alone, equivalent to 5.7 days of normal volume. The same review carries a 51% probability of Textron being added to MSCI USA Small and MSCI World Small, meaning the net flow picture depends almost entirely on where the stock closes around the rank date. The earnings print on October 29 lands three weeks before the announcement, making it a direct input into that decision.

The report will therefore test whether Textron can deliver results strong enough to shift the market cap back toward the threshold that keeps it in the large-cap benchmarks, at a moment when the analyst community has already begun adjusting its expectations downward.