UBS BB analysts cut the target price of Petrobras shares (PETR4) from $ 51 to $ 49, but reiterated buying recommendation for the papers, according to a report sent to customers on Monday. Despite the cut, the price still represents a 33%potential (valorization) (appreciation) upside.
Matheus Emeldt and team stressed that there is a higher risk, but reiterate purchase due to dividends and growth.
Analysts also pointed out that the investment above Guidance in 2024 raised the perception of risk about the actions, and agree that it was a problem, but they considered investors were overly pessimistic about Capex (investments in capital).
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Defending the purchase recommendation, they argued that dividends remain at an attractive level and with a prize compared to other large companies and national names, though less than before.
For analysts, dividend yield from 13% to 2025 remains attractive, although it is a softer prize. With this update, they cut the FCF (Free Cash Flow) estimates and, as a result, their forecast of dividends for 2025 to 13.2% (of which 2% of extraordinary), before about 16.5%.
“We still see 13.2% as attractive, with a difference to consensus between large European companies in 2.6 pp (percentage points) and those of the US at 6.2 pp, both in line with historical averages,” analysts evaluate.
In addition, within the UBS coverage in Brazil, Petrobras has the third largest yield for 2025, but signals that the FCF and the dividends of Petrobras are correlated to the dollar.
In the view of analysts, there is also a significant growth of production to 2025 and 2026 that seems not to be priced, while the elections, while still early, can open opportunities.
“Less obvious, but we still like Petrobras,” they said.
“We think it is very early to talk about elections, but a possible reclassification can be a trigger. The elections, which usually begin to master discussions about 12 months earlier, have become a matter of investors, almost 2 years before this time. Petrobras actions usually stand out from pairs between 2 and 3 months before the election, but this can be anticipated for Brazil more before that. That a possible reclassification can bring a 20-70% appreciation to the stock, although we currently see this as optionality and not yet a reason to have assets, ”they point out.
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