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Embraer SA: Overcoming Tariff Challenges with Strategic Opportunities and Diverse Product Lines

Embraer SA: Overcoming Tariff Challenges with Strategic Opportunities and Diverse Product Lines

Analyst Kristine Liwag of Morgan Stanley maintained a Buy rating on Embraer SA, retaining the price target of $65.00.

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Kristine Liwag’s rating is based on several factors that highlight the potential for Embraer SA despite recent challenges. The imposition of a 50% tariff on Brazil by the US poses a significant risk to Embraer’s Executive Aviation segment, as a considerable portion of its aircraft components are manufactured in Brazil. However, Liwag sees the potential pullback in Embraer’s stock price as an attractive buying opportunity, emphasizing that the company’s diverse product lines and strategic mitigation efforts could offset the tariff impact.
Furthermore, Liwag notes that Embraer’s Commercial Aviation and Defense segments are less exposed to these tariffs, with American Airlines, a major customer, bearing the duty costs for the E175 aircraft. Additionally, Embraer’s proactive cost reduction measures and the potential for a deal to alleviate tariff pressures contribute to a positive risk-reward outlook. Overall, Liwag reiterates an Overweight rating with a price target of $65, seeing Embraer as an underappreciated and undervalued player in the aerospace and defense sector.

In another report released on July 3, Bank of America Securities also reiterated a Buy rating on the stock with a $65.00 price target.

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