Petrobras Brasileiro (NYSE:PBR) stock is trading higher by 5% to $10.06 as JP Morgan upgrades to Overweight on “cheap” valuation vs peers.
Analyst Rodolfo Angele commented, “We bring Petrobras stock back to an Overweight rating. Our upgrade is based on: (a) lower risk perception as not only has the new management team maintained the strategic direction (committing to focus on pre-salt, capital discipline, portfolio management, cost controls, and safety) but also shown continuity in action.
The advancement of the sale of the refineries and promotion of key executives from the ranks both support the idea of continuity and thus lower risk. (b) Robust operating performance supports FCF yields of 21%. (c) Cheap valuation as PBR trades at 3.2x EV/EBITDA vs. Russian O&G names at 4.4x and majors at 5.5x. Even with no re-rating, we see a potential equity value expansion of 19% p.a. until 2023. (d) Upcoming catalyst as potential for dividend payments becomes a reality as gross debt quickly converges to the threshold of $60bn.”
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Anthony Gonzales brings 3 years of experience in helping grassroots, mid-sized organizations and large institutions strengthen their management and resource generating capacities and effectively plan for the future. He is also a mentor and professional advisor to artists working in all disciplines. He is the gold medalist from St. Marco University of Science and Technology in the Bachelors of Financial Management as well.