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Analyst Blog

On Jun 18, 2013, the shares of Embraer SA (ERJ - Analyst Report) hit a 52-week high of $38.77. The adjusted closing price was $38.58 per share, a 12.3% jump from the beginning of the second quarter of 2013.

Embraer received a steady flow of orders in the first quarter, exiting with a backlog of $13.3 billion, up $0.8 billion sequentially.

In addition, firm commitments received by the company in the first two days of the Paris Air Show are a testament of the Brazilian jet maker’s popularity. One of the largest commitments came from SkyWest Inc. The company signed firm orders for 100 E175-E2 aircraft, with another 100 Purchase Rights. If all the orders are executed, the contract value is expected to touch $9.36 billion at list prices.

The launch of the advanced E-2 commercial aircrafts has the potential to steal the show in the commercial 70-130 seat market. This low cost, fuel efficient and spacious cabins are making the E-Jet commercial aircrafts popular. We expect Embraer to further boost its order tally in the Paris Show.

In Jun 2013, Standard & Poor’s upgraded Embraer’s credit rating to 'BBB' from 'BBB-'. The upgrade in credit rating is based on the company’s strong credit metrics and operational efficiency. Moreover, the improvement in the regional airline market is also going to benefit Embraer.

Embraer SA retains a Zacks Rank #3 (Hold).  Other companies in the industry worth considering are Erickson Air-Crane Inc. (EAC - Snapshot Report), Alliant Techsystems Inc. (ATK - Analyst Report) and Wesco Aircraft Holdings Inc. (WAIR - Snapshot Report). Erickson Air-Crane presently has a Zacks Rank #1 (Strong Buy) while Alliant Techsystems and Wesco Aircraft Holdings hold a Zacks Rank # 2 (Buy).
 

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