Does Boeing's Management Overhaul Signal Crucial Turning Point? Analysts Weigh In

Zinger Key Points
  • Benchmark analyst emphasizes need for drastic action to restore stakeholder confidence.
  • BofA Securities analyst notes concerns over slow production ramp-up and delivery issues, maintaining a Neutral rating.

Analysts from Benchmark and BofA Securities expressed their views on recent significant management changes and delivery concerns at The Boeing Company BA.

This week, David Calhoun, the CEO of Boeing, revealed the decision to step down along with chairman Larry Kellner in the wake of an investigation by federal authorities into the January incident when a door panel blew out in mid-flight.

Also, the company disclosed the immediate departure of Stan Deal, president and CEO of the company’s Commercial Airplanes division.

RelatedBoeing CEO Dave Calhoun ‘Should Have No Voice In Naming Successor,’ Says Jeffrey Sonnenfeld: ‘They Failed. He’s Like A Wounded Animal In The Corner’

Boeing’s Board has reportedly embarked on a quest to find a new leader for the aerospace giant.

Benchmark analyst Josh Sullivan (Buy, $250 price target). said the FAA safety reports, continued slow production ramp-up, high-profile safety incident, lack of commercial future outlook, and share loss to peer required drastic action from the Board to reinstate confidence in stakeholders.

On the other hand, BofA Securities analyst Ronald J. Epstein maintained a Neutral rating at a price target of $210 and highlighted that according to AAP/AIR, Boeing had delivered 16 737s aircraft as of March 21 (only three more than last week’s cumulative March deliveries) and no deliveries of 767, 777 and 777x aircraft.

The analyst writes that AAP/AIR believes that either the production is delayed by up to two months or the aircraft are reworked.

Nevertheless, the analyst expects Boeing to continue to benefit from strong global demand and increased quality assurance, despite possible short-to-medium term risks.

BofA analyst estimates EPS of $(4.45) in FY24, $4.30 in FY25 and $6.80 in FY26.

Also ReadBoeing Labor Union Pushes For Board Voice: Report

Investors can gain exposure to the stock via IShares U.S. Aerospace & Defense ETF ITA and Direxion Daily Aerospace & Defense Bull 3X Shares DFEN.

Price Action: BA shares are down 1.7% at $188.15 on the last check Tuesday.

Photo via Shutterstock

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