On Monday, Barclays (LON:BARC) reiterated its Equalweight rating and $190.00 price target on Boeing (NYSE:BA) stock, as the aerospace company continues its search for a new Chief Executive Officer.
The firm emphasized that prior aerospace and defense (A&D) experience should not be a prerequisite for Boeing's next CEO, citing examples of successful industry leaders without such background.
The firm noted that Steve Mollenkopf, current Chairman of the Board at Boeing and former CEO of Qualcomm (NASDAQ:QCOM) from 2014 to 2021, could be a viable candidate for the CEO position due to his successful leadership and engineering background.
Other potential candidates for Boeing's CEO role include executives from various sectors, such as R. Preston Feight of PACCAR (NASDAQ:PCAR), D.G. Macpherson of W.W. Grainger, Alok Maskara of Lennox International (NYSE:LII), R. Adam Norwitt of Amphenol (NYSE:APH), Jennifer Parmentier of Parker-Hannifin (NYSE:PH), and Vincente Reynal of Ingersoll Rand (NYSE:IR).
Barclays also mentioned executives with A&D experience who have been discussed as potential leaders for Boeing. These include Wes Bush, former CEO of Northrop Grumman (NYSE:NOC); Dave Gitlin, CEO of Carrier Global (NYSE:CARR) and former United Technologies (NYSE:RTX) executive; Pat Shanahan, CEO of Spirit AeroSystems (NYSE:SPR) with a long history at Boeing; Stephanie Pope, CEO of Boeing Commercial Airplanes; and Greg Smith, former Boeing CFO.
The turnaround for Boeing is described as a "heavy lift" that is expected to take a considerable amount of time. Barclays suggests that it is critical for the incoming CEO to establish realistic financial targets early in their tenure, including a normalized free cash flow in the $6-8 billion range, rather than the previously anticipated $10 billion.
Additionally, the firm recommends a detailed plan to repair Boeing's balance sheet, which should include the issuance of at least $10 billion in equity, and a specific product development strategy to replace the current approach.
Barclays' analysis indicates that Boeing's recovery and future success will require strong leadership and a clear, achievable strategy, emphasizing the importance of setting attainable goals and taking decisive action to strengthen the company's financial position.
InvestingPro Insights
As Boeing continues its quest for new leadership, the company's financial health and market performance remain pivotal for investors. According to InvestingPro data, Boeing's market cap stands at $109.03 billion, indicating the significant scale of the company within the aerospace sector. However, the firm's financial metrics raise concerns, with a negative P/E ratio of -49.84, suggesting that the company is not currently profitable. This is further emphasized by a negative adjusted P/E ratio for the last twelve months as of Q1 2024, which sits at -86.64. Moreover, Boeing's revenue growth has been mixed, with an 8.37% increase over the last twelve months, yet a quarterly decline of 7.54% in Q1 2024.
InvestingPro Tips highlight that Boeing is a prominent player in the Aerospace & Defense industry but has been grappling with weak gross profit margins of 11.48%. Analysts have revised earnings downwards for the upcoming period and do not anticipate the company will be profitable this year, reflecting the challenges ahead for the incoming CEO. Additionally, Boeing's stock price movements have been quite volatile, with a six-month price total return of -24.06%, which may be of particular interest to investors looking for market timing opportunities.
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