Things have gone from bad to worse for Boeing (NYSE:BA) stock over the past few quarters, with a slew of negative news surrounding problematic jets hogging the headlines. With top boss David Calhoun poised to step down from his role as CEO at year’s end, questions linger as to who could be next in line to lead Boeing out of its rough multi-year rut.
Indeed, Boeing’s reputation has taken a beating recently, thanks in part to questionable quality issues and the untimely death of whistleblower John Barnett. Undoubtedly, it’s hard to find much, if anything, to be bullish about as Boeing looks to improve and regain the people’s trust.
Whether it takes a year or longer, I think the company’s shift from cost savings to quality is inevitable. And though it could take many years (perhaps even decades) to repair its reputation, I’m more inclined to be more bullish than bearish as investors finally give in and throw in the towel after the non-stop wave of quality issues.
A Shift From Cost Savings to Quality Is a Must
At this juncture, things certainly look bleak for the ailing American aircraft maker as Calhoun looks to wrap up his tenure in the corner office. Had Boeing not been in a virtual global duopoly, I think that the stock would have been far worse off after countless headlines that go above and beyond just issues with the infamous Boeing 737 MAX.
Even as Airbus (OTC:EADSF) looks to win more business from every Boeing fumble, it can’t meet global aircraft demand on its own. Given this, I think it’s just a matter of time before Boeing finds its way again and moves on from its quality crisis.
Whether a CEO shift will be enough to help the firm change corporate governance for the better, though, remains the multi-billion dollar question. Personally, I would have expected Boeing to shift its focus from cost savings to quality by now, years after light was shed on the issues with the Boeing 737 MAX aircraft and the fatal flaw of the MCAS (Maneuvering Characteristics Augmentation System).
It’s not hard to imagine that many bottom fishers for Boeing stock view the new CEO hunt as a potential catalyst for the stock. After all, the best way to drive the most impactful changes in corporate culture change is to have a new leader who prioritizes safety above all else, including profitability. Indeed, it won’t be easy to repair Boeing’s tarnished reputation, but it’s not quite lights out for the company yet as it looks to gain another shot to prove it can rise out of a crisis under its own two feet.
Indeed, widespread changes in corporate culture can take time, perhaps a great deal of time. In any case, Boeing needs to find the right man or woman to lead Boeing out of the depths of its latest downturn. Certain Wall Street analysts have some intriguing ideas for where Boeing should look as the firm attempts to find a new leader to rebuild Boeing’s reputation and get its stock off the tarmac.
At this juncture, perhaps the improving public trust is the more critical needle-mover of BA stock than the actual quarterly numbers themselves. If it can regain trust with a quality-driven focus while also hitting 737 MAX production targets for 2025, I do not doubt BA stock’s ability to fly higher again. Of course, turbulence is to be expected as Boeing looks to move through its most colossal upper-level management shifts in recent memory.
Boeing’s Next CEO Should Come from SpaceX, Says Analyst
The billion-dollar question remains: where will Boeing look for a trusted leader to propel it from its massive rut? Robert Spingarn, an analyst at Melius Research, thinks the company should pursue an “out of the box” person, perhaps from Elon Musk’s private firm SpaceX, to take the role of the soon-to-be-departing David Calhoun. Specifically, Mr. Spingarm singled out SpaceX’s COO Gwynne Shotwell as a promising candidate.
Indeed, Shotwell’s resume certainly looks pretty stacked. In any case, I think Spingarm is completely right in that Boeing should go for someone who is a more non-traditional candidate, perhaps someone with an extensive track record of rolling up the sleeves on day-to-day operating activities. Additionally, SpaceX stands out as an aerospace company with a solid reputation in commercial aerospace. Just look at its extensive list of historic accomplishments under the leadership of Elon Musk.
Perhaps hiring someone from SpaceX could be the immediate way to reinject trust back into the Boeing brand. Either way, it could be an arduous task to convince one of the big names from SpaceX to jump to Boeing. Anything is possible, I suppose, if the price is right.
Is Boeing Stock a Buy, According to Analysts?
On TipRanks, BA stock comes in as a Strong Buy. Out of 26 analyst ratings, there are 17 Buys, eight Holds, and one Sell recommendation. The average BA stock price target is $242.33, implying upside potential of 32.3%. Analyst price targets range from a low of $164 per share to a high of $300 per share.
The Bottom Line
With its still incredibly dominant position in the aircraft market, Boeing still has the opportunity to change. The good news is that the firm seems to be on the right track as Calhoun prepares to leave and the hunt for a new CEO begins. It won’t be easy to turn the tides at Boeing, but if the firm can find the right person, it may just be able to put its recent quality crisis in the rearview mirror for good.
