Here Is Why Wolfe Research Upgraded Embraer S.A. (ERJ)'s Stock Rating To Outperform

Embraer S.A. (NYSE:ERJ) is among the 11 Best Large Cap Defense Stocks to Buy According to Analysts. On July 31, Wolfe Research upgraded the stock’s rating from Peer Perform to Outperform, citing improved fundamentals and exemption from steep U.S. tariffs.

Late last month, the planemaker came away unscathed when President Trump imposed a 50% tariff on most goods imported from Brazil. Embraer S.A. (NYSE:ERJ) was spared at 10%, avoiding a potential pandemic-like hit to its financials.

Wolfe Research analyst Myles Walton said the effective impact of the tariff was now closer to 5%, considering the high proportion of American-sourced content on Embraer S.A. (NYSE:ERJ)’s aircraft. He wrote the following in a client note on July 30:

“When we downgraded shares of Embraer (ERJ) in March, we were wary of an unpriced tariff risk (and a stock that had doubled in the prior 12 months). That risk has now come and gone, but the stock is at the same level.”

The analyst also noted Embraer S.A. (NYSE:ERJ)’s robust commercial aviation orders, fueled by strong demand at the Paris Air Show. Walton added that recent discussions with the management have further raised expectations that the momentum will continue.

Embraer S.A. (NYSE:ERJ) is a Brazilian jet manufacturer that produces aircraft for commercial, executive, and defense purposes.

While we acknowledge the potential of ERJ as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.