UBS has updated its outlook on Embraer (ERJ, Financial), with analyst Alberto Valerio increasing the company's price target from $35 to $39. Despite this upward revision, the analyst maintains a Sell rating for the company's shares. The overall cautious perspective is retained, as noted in a research communication to investors.
The decision to elevate the price target reflects some positive elements perceived by the analyst in the company's prospects. However, the Sell rating suggests ongoing concerns about the stock's potential, which investors are advised to consider. This mixed view highlights the complexity of the factors currently influencing Embraer's market position.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 11 analysts, the average target price for Embraer SA (ERJ, Financial) is $51.27 with a high estimate of $65.00 and a low estimate of $35.00. The average target implies an upside of 15.87% from the current price of $44.25. More detailed estimate data can be found on the Embraer SA (ERJ) Forecast page.
Based on the consensus recommendation from 13 brokerage firms, Embraer SA's (ERJ, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Embraer SA (ERJ, Financial) in one year is $24.13, suggesting a downside of 45.47% from the current price of $44.25. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Embraer SA (ERJ) Summary page.
ERJ Key Business Developments
Release Date: February 27, 2025
- Record Revenue: $6.4 billion, highest in company history.
- Backlog: $26.3 billion, an all-time high.
- Net Debt: Close to zero.
- Book-to-Bill Ratio: Company-wide 2.2; Executive Aviation 2.7; Defense & Security 3.3; Commercial Aviation 1.6; Service & Support 1.9.
- Commercial Aviation Revenue Growth: 20% increase in 2024.
- Executive Aviation Revenue Growth: 25% increase in 2024.
- Defense & Security Revenue Growth: 40% increase in 2024.
- Service & Support Revenue Growth: 15% increase in 2024.
- Adjusted EBIT: Commercial Aviation $55 million (2.5% margin); Executive Aviation $205 million (11.7% margin); Defense & Security $45 million (6.2% margin); Service & Support $270 million (16.5% margin).
- Aircraft Deliveries: 206 aircraft in 2024, a 14% increase from 2023.
- Adjusted EBITDA: $922 million for 2024, 14.4% margin.
- Adjusted Free Cash Flow: BRL676 million for 2024.
- Adjusted Net Income: BRL462 million for 2024, 7.2% margin.
- Net Debt Position: BRL111 million, 0.1 times net debt-to-EBITDA ratio.
- 2025 Guidance: Revenue between $7 billion to $7.5 billion; EBIT margin between 7.5% and 8.3%; Free cash flow of $200 million or higher.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Embraer SA (ERJ, Financial) achieved record revenue of $6.4 billion in 2024, marking the highest level in the company's history.
- The company reported an all-time backlog record of $26.3 billion, indicating strong future demand.
- Embraer SA (ERJ) has made significant progress in financial deleveraging, with net debt now close to zero.
- The Executive Aviation division finished 2024 with a record $7.4 billion backlog and an industry-leading 2.7 book-to-bill ratio.
- Defense & Security recorded its best sales performance in history, with a backlog rising to $4.2 billion and a superb 3.3 book-to-bill ratio.
Negative Points
- Supply chain challenges remain a significant issue, impacting production and delivery schedules.
- The E175 E2 aircraft development is delayed due to ongoing US mainline scope clause discussions, affecting potential sales.
- Free cash flow guidance for 2025 is lower than previous years, partly due to the timing of defense prepayments.
- There is uncertainty regarding the impact of potential tariffs on access to the US market for Executive Jets.
- The company faces volatility in exchange rates and inflation, which could impact financial performance.
