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Embraer Posts Smaller-Than-Feared Quarterly Loss; Shares Pop 7%

Shares of Embraer SA jumped 6.8% after the Brazilian aerospace conglomerate reported a better-than-expected loss in the fourth quarter and surpassed analysts’ expectations for revenues.

Embraer (ERJ) incurred a loss of $0.07 per share in 4Q, compared to the $0.32 loss per share estimated by analysts and $0.81 per share reported in the prior-year quarter.

Total revenue came in at $1.84 billion, topping analysts’ expectations of $1.66 billion but declining 11.7% year-over-year. Growth in the defense & security segment was fully mitigated by revenue declines in commercial aviation, executive jets, and services & support segments.

The company’s adjusted EBITDA was $145.6 million in the quarter, up from $65.8 million in the same quarter last year. In 4Q, Embraer delivered 28 commercial jets and 43 executive jets. (See Embraer stock analysis on TipRanks)

Cowen & Co. analyst Cai Rumohr maintained a Hold rating and a price target of $7 (34.5% downside potential) based on the company’s “better than expected” 4Q results.

Overall, the stock has a Moderate Sell consensus rating based on 2 Holds versus 1 Sell. The average analyst price target of $6 implies 43.8% downside potential from current levels.

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