CFRA Upgrades Petrobras (PBR) to Hold

CFRA analyst Stewart Glickman upgraded Petrobras (NYSE: PBR) from Sell to Hold with a price target of $13.00.

The analyst comments "Our upgrade is on valuation, with shares down 15% year-to-date. We keep our 12-month target at USD13, a 5.9x multiple of EV to projected 2025 EBITDA, a slight discount to U.S. supermajor oil peers, on concerns over 2025 crude oil pricing. We cut our 2024 earnings per ADS estimate by BRL0.12 to BRL17.91, but lift 2025's by BRL0.35 to BRL16.78. Q3 earnings per ADS of BRL5.12 vs. BRL4.18 beat the consensus view by BRL0.86. The year-over-year earnings improvement was in part because of the relatively better performance on foreign exchange gains and losses. However, EBITDA was down 15% Y/Y. Capex was up a notable 31% to USD3.8 billion, but mainly on some front-loaded spending in Q3. PBR did not adjust its CY 24 capex guidance. We remain unexcited by PBR's forays into non-core activities, but the bulk of the capex in Q3 went into pre-salt plays offshore Brazil, which is sensible. Our estimates presume a 5.55-to-1 exchange rate between the Brazilian real and the U.S. dollar. Our estimated yield is 17%."

For an analyst ratings summary and ratings history on Petrobras click here. For more ratings news on Petrobras click here.

Shares of Petrobras closed at $13.68 yesterday.

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