Embraer award from Boeing ‘disappointing,’ but reaction ‘overdone,’ says BofA

After Embraer (ERJ) announced the conclusion of arbitration proceedings between itself and Boeing (BA) and the award of $150M in relation to Boeing’s termination of a proposed commercial aviation joint venture, BofA said the $150M payment was “disappointing” to Embraer given that it likely represents only around half of the costs incurred from the deal termination, which management estimated totaled around $300M. BofA sees Monday’s decision as “representative of a middle ground” between $0 and the $300M sought and views the market’s reaction to the outcome as “overdone” as it has no material impact on the company’s operating performance. BofA maintains a Buy rating and $40 price target on Embraer shares.