Embraer (EMBR3) shares soared on B3 and the New York Stock Exchange (Nyse), after analysts revised the recommendation and target price for the shares.
The share traded on the Brazilian stock exchange jumped 10,2%, quoted at R$29,37. Share receipt (ADR) in New York advanced 9,5% to US$23,48.
Morgan Stanley analysts raised their forecasts for Embraer and adjusted the target price of the company's ADRs from US$19,50 (R$97,14) to US$40 (R$199,25), according to a report sent to customers.
“We see Embraer as a third commercial aerospace player rising to the occasion and forcing its way into the Boeing and Airbus duopoly,” wrote Kristine Liwag and team. “After decades of investments, Embraer is entering a harvest period.”
They note that while Boeing faces difficulties with aircraft production and delivery, and with Airbus' backlog already filled by the end of the decade, Embraer is the third commercial aircraft manufacturer to rise to the occasion.
“We expect Embraer to benefit from commercial aircraft orders in an environment where demand for aircraft exceeds supply,” they stated in the report.
The Morgan Stanley team highlighted that Embraer has survived several market cycles, including the Covid-19 pandemic in 2020; as well as competitive dynamics challenges from significantly larger and better financed competitors, in this case, Boeing and Airbus.
“After several investment cycles to expand and deepen the portfolio in commercial aviation, executive aviation, defense and security and services, Embraer is prepared to prosper in this upward cycle”, they reinforced.
For 2024, analysts now forecast total revenue of US$6,3 billion, with EBITDA of US$702 million and earnings per share of US$1,38 (R$6,87). Free cash flow is estimated at $329 million.
In 2025, total revenue is estimated at US$7,5 billion, with Ebitda of US$850 million and earnings per share of US$2,38 (R$11,86). Free cash flow is expected to be US$341 million.
“Embraer has gone from being a niche aircraft manufacturer to becoming a diversified company of global prominence in the aerospace and defense sector, prepared to gain market share”, assess Liwag and his team.
Embraer's shares rose 6,49%, to R$28,38, on the São Paulo stock exchange this early afternoon, having renewed their intraday high in eight years at R$28,41 at the best moment, while ADRs (share receipts traded in the United States) rose 6,02%, to US$22,73 (R$113,22), in New York.
In 2024, shares traded on B3 will accumulate an appreciation of around 27%.
The company reports its performance for the last quarter and the year 2023 on Monday (18).
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Via: CNN
