Experts and the market are cheering General Electric Co.'s (GE) CEO shuffle that brings in Larry Culp to take over from John Flannery immediately.
Shares of the long-time industrial leader have risen over 10% in Monday trading.
Chris Versace, Real Money contributor and chief investment officer at Tematica Research, said this could be the "shot in the arm" the beleaguered company needs.
"GE's new CEO, H. Lawrence Culp Jr., has the experience associated with being a GE board member but also the different perspective honed by his ties to Danaher (DHR) ," he told Real Money. "He very well could be the shot in the arm GE needs, and now we have to wait and see what his 100-day plan is."
Versace said that Culp's track record at Danaher shows a profile of a CEO capable of leading an industrial company to consistent growth. Culp served as a chief executive at the company for 14 years from 2000 to 2014.
Versace added that Flannery's quick exit could leave lessons for Culp, should he not act quickly to foment a turnaround.
"One of the likely issues [in GE's turnaround] was that outgoing CEO John Flannery was with GE for over 30 years, and a "company man" approach wasn't enough to bring in the degree of changes to reposition GE for what's ahead," he said this morning. "The fact the board unanimously voted for the change signals it had lost faith in Flannery's plan."
Analysts were also positive in their assessment of the bold move from the GE board.
"Larry shows new thinking, it's outside blood," Morningstar Equity Research analyst Joshua Aguilar told Real Money. "You look at Flannery and he was [with GE] his entire career, so I think this change is a good choice."
He added that he thinks the "effective immediately" clause is a "message to the market" that the turnaround has just not been quick enough for the board. Aguilar explained that the company is wise to show it is serious about speeding up its new strategy and he believes Culp is the right man for the job.
"We had targeted Larry in June, shortly after he joined the board [in April]," he noted. "We were a bit surprised with the timing, to be honest, but we think Larry is the best choice."
To be sure, given the short leash that Flannery was afforded despite his "company man" status, Culp will need to move quickly to start his turnaround plan.
"He's going to be under a lot of pressure," Aguilar said. "It will take some time to really get this turnaround going, but I think Culp could definitely help kickstart the plan."
He set a price target of $15.70 per share and placed a four star rating on the stock meaning a "strong buy."
