Bernstein SocGen Group Reiterates Outperform Rating on Boeing (BA)

Bernstein SocGen Group analyst Douglas Harned reiterated an Outperform rating and $207.00 price target on Boeing (NYSE: BA)

The analyst comments "There were many reports about the choice of Boeing’s next CEO. The board’s decision was announced July 31 with Q2 earnings. We heard many calls for an outsider to drive cultural change. While cultural change is important, being an outsider (Ortberg is far from the first) has its own challenges at Boeing. It has been, and will be difficult for a new CEO to gain visibility deep into the organization, which is where the challenges lie. There is a need for cultural change. But, having seen the organization evolve over the last 25 years, I can say one wants neither the culture of the early 2000s, nor the one of the late 2010s. We see six areas of focus for the new CEO: Build networks to strengthen visibility and communications through the company. Focus efforts on operations, as sales and product development are not the key issues. Reinforce relationships with customers and regulators that will continue to require attention. Better assess the extent of performance issues at BDS to end the train of charges. Balance inventory and supply chain risk to avoid shocks to the supplier base. Manage cash around equity raise concerns, with large moving parts. The common theme here is, however, gaining visibility into each business. Beyond near-term tactical actions, we expect Ortberg to take his time before laying out a strategy, as we have seen elsewhere (e.g., Rolls-Royce). Solutions will not be obvious without getting down to the floor. There is plenty that can go wrong in Boeing and one may never know why."

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Shares of Boeing closed at $164.13 yesterday.

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