Betting on airplanes and air cabs: Freedom advises buying securities of Brazil's Embraer

Donald Trump's duties against Brazil have spared aircraft manufacturer Embraer, which makes its receipts an attractive choice for investors, according to analysts at Freedom Broker. They advise buying the securities as the fundamentals look good and the company has good prospects in the defense sector and in the air cab market. In addition, Embraer securities received a rating upgrade from Wolfe Research.

Embraer's U.S. depositary receipts jumped more than 13% in trading on July 30 and extended gains of about 5% more on the 31st after U.S. President Donald Trump exempted the aircraft maker from higher duties of 40% on imports from Brazil.

This moderate positive impulse may persist after the securities pushed back from the local bottom, analysts of Freedom Broker predicted (Oninvest has their note). They advise to buy Embraer receipts, and their target price of $61.5 implies growth of quotations by 12% relative to the level of trades closing on July 30.

Fundamentally, Embraer looks "quite good", especially on the eve of its second-quarter report (expected to be published on August 5), Freedom Broker said. The company's first quarter results confirmed its full-year forecast: it anticipated double-digit growth in commercial and business aircraft deliveries, the analysts added. The impact of the U.S. duties will be limited and will affect mainly the business aviation segment, Freedom wrote, citing comments from Embraer management. The company also operates in the commercial and military aviation segments.

"The share of sales outside the U.S. remains significant, providing some competitive advantage over U.S. producers, especially against the backdrop of the updated Section 232," Freedom analysts wrote. Section 232 is the section of law in the U.S. that President Donald Trump has tapped to impose and increase duties on imports of steel and aluminum and later also copper.

Analysts at Wolfe Research upgraded shares of Embraer from Peer Perfrom Neutral -  "on par with the market" to Outperform ("above market") on July 30, reported CNBC.

According to Wolfer, Embraer shares still have room for further growth thanks to improving fundamentals and the elimination of a key trade risk from the U.S., reports Seeking Alpha. For Embraer, the actual U.S. duty rate would not even be the standard 10%, but closer to 5% because of the high proportion of U.S.-origin components in the Brazilian company's planes, said analyst Miles Walton.

Wolfe set a $64 target price on Embraer shares - 17% above the current price.

Embraer's defense segment is characterized by a high volume of deliveries to European customers - about 50%, Freedom Broker analysts said in a note. Thanks to the growth of defense budgets of European countries, Embraer can significantly increase its revenue in the coming years, they suggest.

In the US, the company's position in 2024 was weak, but it is now working with a US consultant to bring the KC-390 transport plane to the US market, Freedom Broker writes. That airplane is already 57% U.S. components. India, Saudi Arabia and Poland are also in talks to buy the KC-390, and Mexico is seen as a potential buyer, the note said.

For an investor, Embraer stock also represents an opportunity to bet on the promising air cab industry, Freedom Broker says. The company owns about 80% of startup Eve Holding Inc.

"The year 2025 could be a pivotal year for Eve, with the first flight of a full-scale prototype planned and the first firm orders received, opening up a new vector for long-term growth. [...] Flight operations are expected to begin in 2026. The latest data shows a 'non-firm' order book of 2,800 units worth about $14 billion, with customers including United Airlines (order for 200 units with an option for another 200), Republic Airways, SkyWest, and BAE Systems from the defense sector," the note reads.

Embraer receipts have appreciated 57% since the start of 2025 and 96% over the past 12 months. They have just 13 recommendations from analysts, and most advise buy: 11 Buy ratings and one Overweight, shows MarketWatch. Another analyst thinks the securities are better to hold (Hold).

Embraer's stock is appreciating faster than that of its rival Bombardier, with the latter gaining 64.5% in 2025 and 81% over the past 12 months. By comparison, Boeing shares are up about 25% in both the first and second periods.

This article was AI-translated and verified by a human editor