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TheStreet Open House

10 BRIC Stocks for 2012: SOHU on Top

3. Embraer (ERJ), engaged in the manufacture of commercial aircraft, also supplies defense aircraft to the Brazilian Air Force and armed forces in Europe, Asia and Latin America. It also develops a line of executive jets.

Of the 23 analysts covering the stock, 67% recommend a buy while the rest suggest a hold. There are no sell ratings on the stock. On average, analysts estimate 51.5% upside to $35.85 in value from current levels.

For the third quarter of 2011, the airline company recorded revenue of $1.36 billion, compared to $1.04 billion in the same quarter last year. During the quarter, ERJ delivered 28 jets to the commercial aviation market and 18 to the executive aviation market. The order backlog has increased by $200 million to $16 billion, led by high sales activity in executive aviation.

As per the contract signed between BOC Aviation and Embraer, 15 Embraer 190 aircraft are scheduled for delivery in the fourth quarter of 2012 through 2014. With the delivery of its first Phenom last week, the company has orders for more than 22 Phenom 100s until 2015.

Mid-November, Embraer, in an attempt to grow its commercial aviation organization and customer support structure in the Middle East, opened a representative office in Dubai, aiming at strengthening ties with customers with high demand for E-Jets of 70- to 120-seat platforms.

For 2011, revenue guidance is seen in the range of $5.6 billion to $5.8 billion. The outlook for EBIT and EBITDA is $465 million and $700 million, respectively, thereby pushing margins above the current guidance of 8% and 12%, respectively. ERJ chief executive believes that its defense unit will carve double-digit growth in 2012 and account for one-fifth of revenue in a few years. In 2012, revenue generated would be sufficient to meet debt service obligations, thereby eliminating the need to access capital markets in 2012, the company's chief financial officer recently said.

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