CEO Shuffle: 7 Stocks That Could Gain Momentum From New Leadership
New CEOs can breathe new life into a company by launching new initiatives, hiring more effective managers, and/or entering new markets. One great example is General Electric. (NYSE:GE). When Larry Culp took the helm of that storied firm in 2018, it was losing billions of dollars. However, after cutting GE’s costs and making it far more customer-focused, he was to turn the sinking ship around. Here are seven stocks to gain momentum from leadership changes.
Amazon (AMZN)
One of the stocks to gain momentum from leadership changes is Amazon (NASDAQ:AMZN), where CEO Jassy has done a good job cutting costs. Better, it now it appears that a number of his other initiatives are starting to bear fruit. Providing evidence for that assertion, the firm’s operating margin is expected to jump to 3.9% this year from 2.4% in 2022, and the revenue of its cloud unit is expected to accelerate “in the fourth quarter,” according to Jefferies, an investment bank. Moreover, the bank expects Amazon’s AI initiatives to boost its cloud business over the longer term.
Similarly, another investment bank, Loop Capital expects the cloud unit to “bottom in the next 2-quarters” and expects the unit’s top line to get a boost from its AI “preparedness.”
iCAD (ICAD)
Dana Brown became CEO of iCAD (NASDAQ:ICAD) in March. According to iCAD, Brown “was a founding team member of multiple successful ventures including co-founder and CMO for MetaSolv Software, CEO of Ipsum Networks and spent the early years of her career at Texas Instruments and Arthur Andersen.”
Helping, Brown reported on iCAD’s last earnings call that the company is considering implementing multiple, new initiatives that she believes has a great deal of potential. Among these are selling “a new GPT-powered digital care platform” directly to consumers and seeking to convince insurers to cover iCAD’s offerings. Also noteworthy is that Brown has implemented significant cost-cutting measures at iCAD.
Given Brown’s impressive experience, I think that iCAD is another stocks to gain momentum from leadership changes.
XPeng (XPEV)
Chinese electric-vehicle maker XPeng (NYSE:XPEV) hired Yi Han as its marketing chief in Jan. During Yi’s tenure at Geely, the China-based owner of Volvo, he launched multiple, highly “successful” brands and ” was one of the heroes who made the annual sales volume of Geely jump from 300,000 vehicles to millions of vehicles, Pandaily reported.
It appears that Yi’s hiring is already paying dividends for the automaker, as Xpeng recently announced that its new SUV, the G6, “received more than 25,000 orders within 72 hours of the start of pre-sales.”
Illumina (ILMN)
Illumina (NASDAQ:ILMN) markets DNA sequencing instruments and consumables. The company’s former CEO, Francis deSouza, resigned on June 11 after he was bruised during a proxy battle with multi-billionaire investor Carl Icahn. As a result of the battle, Illumina’s former chairman lost his position.
deSouza was trying to fight U.S. and European regulators in an effort to merge GRAIL, which has developed a successful blood test for about 50 types of cancer, with Illumina. I’m hopeful that the new CEO, who has not yet been hired, will find a way to spin GRAIL off to the owners of ILMN stock. I expect GRAIL to be a very profitable company down the road, given the life-saving blood test that it has developed.
According to a ” discounted cash flow analysis” carried out by Seeking Alpha columnist Jishan Hidu, the shares are worth $253.94, well above their current price of around $200.
Alibaba (BABA)
Chinese e-commerce giant Alibaba (NYSE:BABA) stated on June 20 that Eddie Yongming Wu, the chairman of its two main domestic e-commerce websites, would take over as its CEO, replacing Daniel Zhang. The latter executive, meanwhile will continue in his other, current role as CEO of the firm’s cloud businesses.
Wu “has served as Chief Technology Officer of Taobao and the company’s payments unit, Alipay, and oversaw the monetization efforts of Taobao and Tmall.” Given his extensive experience with the company’s Chinese e-commerce units, he may be able to greatly enhance their performances. Meanwhile, by intensively focusing on the cloud unit, Zhang could be able to greatly improve its financial results.
Meanwhile, China recent interest rate cut could also improve Alibaba’s performance and that of BAA stock over the longer term.
Starbucks (SBUX)
Laxman Narasimhan took over as CEO of Starbucks (NASDAQ:SBUX) in March. Narasimhan has an impressive resume, as, after spending 20 years with the top-notch consulting firm, McKinsey, he was CEO of Pepsi’s (NYSE:PEP) Latin American unit and its Chief Commercial Officer. He later became CEO of Lysol maker Reckitt. At the end of his leadership of the latter company, it was reportedly “just getting its mojo back.”
Before becoming Starbucks CEO, he was given “”a unique immersion experience” there, visiting many parts of its operations.
Starbucks could use some more mojo, as analysts, on average, expect its 2023 earnings per share to come in at $3.43 just 6% above its 2018 EPS of $3.24. Additionally, an expected deceleration of China’s growth in the second half of the year and intense competition in the Asian country’s retail coffee sector may undermine Starbucks’ overall financial results going forward.
On the company’s fiscal Q2 earnings call in April, Narasimhan noted that he plans to implement “efficiencies in (Starbucks’) supply chain, support systems and processes.” He added that he was seeking “to evolve and modernize (the company’s) brand,… business,… capabilities and….culture… by getting back to its basics.” The new CEO also plans to have the company “nurture the limitless possibilities of human connection,” add new components to the firm’s digital offerings, while implementing “a more global presence.”
Some of the new CEO’s plans sound vague,. but it will be interesting to see how they materialize and affect the company’s performance.
Nikola (NKLA)
Michael Lohscheller became CEO of Nikola (NASDAQ:NKLA) in Jan. 2023 after serving as president of the company, which makes battery-elecric trucks and trucks powered by hydrogen fuel cells. As president of Nikola, Lohscheller helped the firm start producing its Tre battery-electric truck and move the company’s fuel-cell vehicle forward.
Before joining NKLA, Lohscheller was CEO of European automaker Opel, which “he led… to sustainable profitability and oversaw its transformation into a leading electrified car brand,” Nikola reported. He was named “Manager of the Year” by the magazine Auto Zeitung in 2019.
The CEO’s credentials are rather impressive, and I have long believed in Nikola’s tremendous potential due to the strong use case for fuel cell trucks and the firm’s top-notch partners.
Lohscheller is sensibly trying to focus Nikola on achieving only a few major goals, as he’s eliminated many of its previous initiatives.
“We like the strategic focus and view [Nikola’s fuel cell truck] as a differentiated product,” investment bank TD Cowen wrote recently. Although the firm lowered its rating on the shares to “hold” from “buy,” citing capital constraints, macro issues, and investor sentiment, I believe that NKLA can do great things with Lohscheller at the helm.
On the date of publication, Larry Ramer held LONG positions in XPEV,NKLA,GE, ILMN, and ICAD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
