UBS Resumes, Downgrades Embraer (ERJ) to Sell
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UBS downgraded Embraer (NYSE: ERJ) from Neutral to Sell with a price target of $19.00 (from $28.00) in resumed coverage. The analyst said the pilot pushback raises risk to E175-E2 viability.
Analyst Darryl Genovesi commented, "We resume coverage of ERJ at Sell (previously Neutral) as we are skeptical of its ability
to monetize its nearly $2B investment in its next generation "E2" commercial aircraft while its midsize bizjet ramp-up is largely behind and competitive growth from Cessna is accelerating. ERJ trades at a ~10% discount to aerospace peers, about in line with its historical discount, but we think a bigger discount is warranted given its slowing growth outlook and still breakeven to negative FCF."
Shares of Embraer closed at $20.30 yesterday.
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