The international economic environment remains an issue for aircraft manufacturer Empresa Brasileira de Aeronautica S.A., or Embraer (ERJ), considering the company’s exposure to the U.S. and European markets.
Moreover, the company’s high dependence on some models, with a primary focus on American airline companies, exposes it to considerable risks. The considerable strain on the Brazilian airport infrastructure will also impact the company’s local top line results.
We do not expect better prospects for the industry. Thus, we have reduced our earnings estimate for fiscal 2010 from $1.39 to $1.31 per ADR and downgraded our recommendation on the ADR from Neutral to Underperform.Zacks Investment Research
