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Research Alert: CFRA Keeps Sell Opinion On Adss Of Petroleo Brasileiro S.a.
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Research Alert: CFRA Keeps Sell Opinion On Adss Of Petroleo Brasileiro S.a.
May 15, 2024 7:57 AM

10:30 AM EDT, 05/15/2024 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

Our 12-month target price of $14, up $1, reflects a 5.2x multiple of enterprise value to projected 2025 EBITDA, slightly below U.S. integrated oil peers, on concerns that weak capital allocation policies are on the horizon. We cut our 2024 earnings per ADS estimate by BRL1.36 to BRL17.48 and lift 2025's by BRL0.94 to BRL16.04. Q1 earnings per ADS of BRL3.65 vs. BRL5.85, missed consensus by BRL0.31. Shares are under pressure today, with Reuters noting that CEO Jean Paul Prates has been asked to step down by Brazil's President Lula. Prates is apparently being replaced by Magda Chambriard, former head of Brazil's energy agency ANP from 2012 to 2016. On the one hand, Chambriard has an engineering background, which we think is a plus. However, we believe the move stems from an effort by Lula to use PBR in a populist fashion, which runs the risk of 1) capital allocation into low-return project boondoggles, 2) lower dividend growth, and 3) renewed subsidies for refined products.

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