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Investing.com - Morgan Stanley (NYSE:MS) has reiterated an Overweight rating and $65.00 price target on Embraer (NYSE:ERJ), a prominent player in the Aerospace & Defense industry that has delivered an impressive 94.75% return over the past year, following the announcement of new US tariffs on Brazil. According to InvestingPro data, the company maintains a GREAT financial health score.
On Tuesday, the US imposed a 50% tariff on Brazil, set to take effect August 1, 2025. According to Morgan Stanley, this tariff primarily impacts Embraer’s Executive Aviation segment, with limited effects on the company’s other business areas.
The investment bank estimates that if the 50% tariff takes effect, Embraer could face an annualized impact of $300-400 million on EBIT. Embraer had previously disclosed that a 10% tariff on Brazil could result in an annual cost of $80 million.
Morgan Stanley expects limited tariff impact in the second quarter of 2025 from the existing 10% tariffs, with minimal effects continuing into the third quarter. The first quarter likely to show pressure on EBIT would be the fourth quarter of 2025.
Despite the negative tariff news, Morgan Stanley views any pullback in Embraer’s stock price as "an attractive buying opportunity," noting that the company’s opportunities extend beyond the US market into product lines that are insulated from tariff risks. With analyst targets ranging from $39 to $68, and revenue growth of 39.31% in the last twelve months, there’s significant potential ahead. Get comprehensive analysis and 8 additional key insights about Embraer with InvestingPro.
In other recent news, Embraer has reported a significant increase in aircraft deliveries, with 61 aircraft delivered in the second quarter of 2025, marking a 30% rise compared to the same period last year. The company also revealed plans for future deliveries, estimating between 77 and 85 aircraft in Commercial Aviation and 145 to 155 in Executive Aviation for the full year. In a major development, Scandinavian Airlines (SAS) has placed a substantial order for up to 55 Embraer E195-E2 jets, valued at approximately $4 billion, to enhance its fleet. The deal includes a firm order for 45 aircraft, with deliveries starting in late 2027.
Additionally, Lithuania has selected Embraer’s C-390 Millennium for its military transport needs, planning to acquire three aircraft to improve NATO interoperability. BofA Securities has raised Embraer’s stock price target to $65 from $55, maintaining a Buy rating, following the company’s strong first-quarter performance and effective management of supply chain challenges. The company saw a 20% year-over-year increase in deliveries and a record-high backlog of $26 billion. These developments highlight Embraer’s continued growth and strategic partnerships in both commercial and defense sectors.
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