BofA Upgrades Embraer On eVTOL Opportunity

Embraer SA ERJ sees a revenue market of $200 billion for its eVTOL (electric vertical takeoff and landing) unit Eve, with 3 billion passengers and 50,000 aircrafts by 2035, according to BofA Securities.

The Embraer Analyst: Ronald Epstein upgrades the rating for Embraer from Neutral to Buy, while raising the price target from $8 to $20.

The Embraer Thesis: Commercial operations of eVTOLs could begin in around two years and Joby Aviation estimates the global addressable market to grow to around $1 trillion by 2040, with a $500 billion opportunity in the U.S. market, Epstein said in the upgrade note.

“We are confident on Eve’s strong position in this nascent market given Embraer’s know-how on developing aircraft on budget and on schedule, existing relationship with regional airlines, worldwide ops for production and maintenance, and robust positioning in the US and Brazilian markets,” the analyst wrote.

“ERJ is currently exploring potential investors and opportunities that could accelerate development in the area,” Epstein noted, adding that there is “significant upside from Eve’s potential public listing or alternative investment opportunities.”

ERJ Price Action: Shares of Embraer had risen by 2.86% to $16.17 at the time of publication Friday.

(Image: Rendering of EmbraerX eVTOL via Embraer)