Petroleo Brasileiro S.A. (NYSE: PBR), or Petrobras, is one of the more actively traded ADRs in the integrated oil and gas plays out there. It has many investors who have chased the prizes of oil and of the growth in Brazil. Unfortunately, many of these investors failed to fully understand that Petrobras does not get to operate solely on its own without strict oversight from the Brazilian government and from its employees. Shares have not done well at all, but one analyst is trying to defend the stock.

Credit Suisse has taken the opportunity to defend shares of Petrobras with its Outperform rating. The firm even pointed to a $25 price target for the ADR, versus a $15.91 closing price, implying upside of 57% if its price target is hit.

The research report said that the most important third-quarter numbers that it could see were weak. It also believes that the market will overlook these weak results and will focus on the possibility that price parity is achieved. That price parity would significantly change the investment case and earnings profile for Petrobras and would bring a strong degree of outperformance.

Another gain is that the board of directors will analyze management’s proposal for a clear fuel pricing methodology. This is believed to structurally change the case for investing into Petrobras, if approved. A key metric is that the developments would allow the investors to better assess the actual value of the company and to focus on the long-term growth prospects rather than having to focus on when (or if) the next price increase that it can charge for oil will come.

24/7 Wall St. would point out that the report is based on a hope that the board of directors does the right thing. Unfortunately, this company has a history of not caring about investors, because it uses Petrobras as oil for the people more than it does for free enterprise, like you see with non-governmental oil companies. Some investors may debate this theory, but the reality is that Petrobras ADRs have been in a very long-term downtrend, and it has buried the investors who bought into that massive secondary offering at much higher prices.

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