Analyst Ronald Epstein from Bank of America Securities maintained a Buy rating on Embraer SA (ERJ – Research Report) and keeping the price target at $28.00.
Ronald Epstein has given his Buy rating due to a combination of factors, including Embraer SA’s robust financial performance and positive future outlook. Embraer’s first quarter adjusted earnings per share for 2024 outperformed Bloomberg’s estimates, primarily attributed to a notable 25% year-over-year increase in revenue. This surge in top-line growth was significantly driven by the Executive Aviation sector, which exhibited a striking 175% year-over-year growth owing to elevated sales volumes. Despite these gains, revenue growth experienced some offset by a decline in Defense sales, which fell by 17% year-over-year due to supply chain challenges. Nevertheless, the overall financial health of the company appears strong, with a 13% year-over-year increase in backlog, indicative of sustained demand, especially a 26% rise in the Commercial Aviation sector.
Moreover, Epstein’s optimism is further supported by Embraer’s reaffirmed outlook for the full year 2024. The company’s projection includes expected deliveries in the Executive and Commercial Aviation segments, with a total delivery increase of 13.8% at the midpoint. Embraer also forecasts total revenues to be in the range of $6.0 to $6.4 billion, which aligns with consensus estimates, and an adjusted EBIT margin between 6.5% and 7.5%. These projections, coupled with the company’s current financial results, underscore Epstein’s confidence in Embraer’s capacity to generate value for shareholders and justify the Buy rating for the stock.
Epstein covers the Industrials sector, focusing on stocks such as Boeing, Hexcel, and CAE. According to TipRanks, Epstein has an average return of 8.5% and a 59.45% success rate on recommended stocks.
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Embraer SA (ERJ) Company Description:
Embraer SA engages in the design, manufacture, and sale of aircraft and its parts for commercial, defense, and executive aviation sectors. It operates through the following segments: Commercial Aviation, Defense and Security, Executive Aviation, and Others. The Commercial Aviation segment is involved in the development, production, and sale of commercial jets; and the provision of support services to regional aviation and aircraft leasing. The Defense and Security segment engages in research, development, production, modification, and support for defense and security aircrafts, as well as other integrated products and solutions including satellites and information and communication systems. The Executive Aviation segment deals with the development, manufacture, and sale of executive jets. The Others segment refers to the supply of structural parts and hydraulic systems and the production of agricultural sprayers. The company was founded by Ozires Silva on August 19, 1969 and is headquartered in Sao Jose dos Campos, Brazil.
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