Analysts say Boeing CEO exit can help the company ‘get back on track’

Analysts are hopeful Boeing’s executive shake-up should help the company and stock overall recover from ongoing safety concerns tied to the 737 Max. The company announced on Monday that CEO David Calhoun will step down at the end of the year after a myriad of safety issues and controversies during his tenure . In January, a door plug was blown off during an Alaska Airlines flight on a 737 Max 9 jet. Calhoun is not the only high-level executive leaving. Chairman Larry Kellner will not stand for reelection, while commercial airplane division head Stan Deal will retire and be replaced by Chief Operating Officer Stephanie Pope. Boeing did not immediately announce succession plans for Calhoun. While Pope was likely already in the process of being groomed to replace Calhoun according to Stifel analyst Bert Subin, the move to look outside of the company for a new CEO could “result in a high-profile hire.” BA YTD mountain Boeing stock has slumped more than 26% from the start of the year after the Alaska Airlines 737 Max controversy. Analysts largely lauded the move as both timely and necessary for Boeing to meaningfully address safety concerns tied to the 737 Max, and specifically highlighted the effort to look outside of the company for a new CEO as a positive catalyst for a cultural shift. Here’s what analysts on Wall Street are saying about Boeing’s incoming changes. Stifel The firm has a buy rating on Boeing stock with a $270 per share price target, or 41% upside from Monday’s close. “That combination could help Boeing get back on track toward normalizing production and should help reduce pressure on the company by its customers. With a sizable risk premium seemingly priced-in to the stock, we think steps toward normalization have the ability to drive share price upside near-term.” Bank of America Bank of America’s Ronald Epstein has a neutral rating on the stock and a price target that calls for a nearly 10% gain. “We do view the leadership changes as a positive for investors, the aerospace and defense industry, and passengers overall. … We see the changes as the first right steps of removing the ‘old guard’, and making way for a new team which can work from a less sullied slate.” TD Cowen TD Cowen has a buy rating on Boeing stock with a $230 per share price target, or 20% above Monday’s close. “The key issue will be who they pick as BA’s new CEO, but the fact that they are giving themselves time to do so likely is a plus,” TD Cowen analyst Cai von Rumohr said. “It provides leadership continuity, which a knee-jerk change would not, and CEO Dave Calhoun clearly is on board with the need to bolster safety.” Morgan Stanley Morgan Stanley’s Kristine Liwag has an equal weight rating on Boeing with a $235 per share price target, or 23% upside moving forward. “The timing of David Calhoun’s resignation provides stability throughout the end of the year during a time of uncertainty, while providing Boeing time to find a successor. … We expect the market to receive the news positively.” Wolfe Research Wolfe Research analyst Myles Walton has an outperform rating on Boeing and a price target of $240, which calls for more than 25% upside. “While the changes create uncertainty, they also provide the opportunity for a break in the negative spiraling narrative and an external indication of awareness of the change being demanded. … We remain Outperform rated and think the changes will get more investors to kick the tires on shares given performance YTD (down ~25%), with opportunity for bigger follow-through opportunity depending on the new leader.” JPMorgan The move to replace Calhoun could also potentially benefit Boeing’s relationships on Capitol Hill, which is a net positive as the company addresses safety issues with both the government and regulators, according to JPMorgan analyst Seth Seifman. JPMorgan maintains an overweight rating on Boeing with a $230 per share price target, or about 20% above Monday’s close. “Boeing’s relationship with the FAA [Federal Aviation Administration] and the folks in Congress who oversee the agency is highly important for the company, and the Alaska accident has set these relationships back meaningfully,” JPMorgan analyst Seth M. Seifman said. “To the extent that changes in leadership can improve these relationships, they should benefit the company over time.” JPMorgan maintains an overweight rating on Boeing stock with a $230 per share price target, or about 20% moving forward.