Jefferies raised the official rating to Buy from Hold, because its upstream progress looks encouraging. The firm thinks that Petrobras may meet its production targets. There is even hope that the recent price hikes in the downstream assets imply that government will allow Petrobras to have lower losses than it has seen. Jefferies also sees a negative free cash flow gap closing in the next three or four years.
Petrobras also has an U.S. Securities and Exchange Commission (SEC) filing out indicating that its board of directors approved the restructuring of its petrochemical portfolio last week, as well as the subsequent merger of its wholly-owned subsidiaries. The move will be submitted to a vote by shareholders in the near future.
Petrobras ADRs are up 1.6% at $15.89 after an hour of trading on Monday, against a 52-week trading range of $14.40 to $24.83. The consensus analyst price target is represented as $25.31 according to Thomson Reuters.
As a reminder, Petrobras shareholders are not really in control here as the company is effectively government dominated, and also given solid ownership by its labor groups.
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