Bradesco BBI Upgrades Embraer (ERJ) to Outperform

Bradesco BBI analyst Victor Mizusaki upgraded Embraer (NYSE: ERJ) from Neutral to Outperform with a price target of $28.00.

The analyst comments "In July 2018, Boeing proposed paying US$3.8bn for 80% of Embraer’s commercial aviation business unit. Since then Embraer’s stock price has fallen -20%, underperforming Ibovespa by 25pp. The current stock price attributes zero equity value to Embraer’s executive aviation and defense businesses and/or a probability of 42% that the deal will be approved. While these two divisions have reported disappointing operational performance, as part of the agreement with Boeing the gains of scale in commercial aviation will be shared with the executive aviation and defense areas, resulting in higher operating margins. Given the growing probability of the deal being approved, in our view the stock price should appreciate 49% and trade at close to our probability-adjusted equity value per share of US$28.00/ERJ."

For an analyst ratings summary and ratings history on Embraer click here. For more ratings news on Embraer click here.

Shares of Embraer closed at $18.85 yesterday.

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