Why Hexcel stock fell today

Aerospace parts manufacturer hexel (HXL -12.26%) announced it was bringing in a new CEO and embarking on a leadership transition that confounded investors. The market generally dislikes surprises, and the news sent Hexcel’s shares down 11% at the start of Wednesday’s trading session.

Amazing changes in the cockpit

Hexcel manufactures lightweight composite technologies that are gaining popularity in the aerospace, transportation and energy markets. These materials have the strength of metal but are easier to customize and are lighter in weight, which helps improve the fuel efficiency of the vehicles they are built from.

Late Tuesday, Hexcel announced that Thomas C. Gentile III will take over as CEO on May 2. He will succeed Nick Stanage, who has agreed to remain as Chairman of the Board until the end of the year to support the transition.

In a statement, the company said Stanage had “worked closely with the board regarding his intention to retire,” but Hexcel had not previously provided investors with any advance information that changes were coming. From 2016 to 2023, Gentile will Spirit AerosystemsThe company’s problems are currently in the news because they contributed to the company’s problems. boeing.

Is Hexcel a Buy on CEO News?

Gentile brings baggage, but during his tenure, long-struggling Spirit AeroSystems actually showed signs of improvement. And while the market doesn’t like to let down its guard, Stanage’s willingness to remain chairman of the board for seven months will help ensure a smooth transition and means there is no implicit reason for the company to do this. Leadership change.

Still, it may take time for Hexcel stock to recover from Wednesday’s decline. This is a company that has historically traded at a premium thanks to its strong operating reputation, and investors may want to take a wait-and-see approach instead of assuming that Gentile will be able to continue what Stanage has established.

Hexcel also faces ongoing risks related to Boeing’s problems. The latest headlines surrounding the aerospace giant include a whistleblower complaint about the 787’s manufacturing process. If proven, these complaints could deal a new blow to the reputation of carbon composite aircraft and raise questions about the viability of metal alternatives.

Given all the uncertainty, there’s no reason to jump into Hexcel stock now.