What Do Analysts Recommend for Petrobras?

Interest Expense and Forex Loss Weigh on Petrobras in 1Q16

(Continued from Prior Part)

Analyst recommendations for Petrobras

In this series, we have examined Petroleo Brasileiro’s (or Petrobras) 1Q16 earnings, segmental analysis, stock performance, and capex position. In this part, we’ll examine the ratings of analysts covering the stock.

The above table shows that none of the 11 firms has rated Petrobras (PBR) as a “buy.” The highest 12-month price target for PBR stands at $7.5, indicating a 2% gain from current levels. Seven firms have rated Petrobras as a “hold.” The average 12-month price target for Petrobras stands at $4.3, indicating a 42% loss from current levels. The remaining four firms have rated PBR as a “sell.” The lowest 12-month price target for PBR stands at $2, indicating a 73% loss from current levels.

The highest price target is from Barclays, whereas the lowest price target is from Credit Suisse. Firms like J.P. Morgan and Morgan Stanley have given price targets exceeding $5 per share for Petrobras (PBR). On the other hand, firms like Credit Suisse, Goldman Sachs, and Piper Jaffray have given “sell/cautious,” “underperform,” or “underweight” recommendations on the stock.

Analyst recommendations for PBR’s peers

Petrobras (PBR) peers Statoil (STO), PetroChina (PTR), and YPF (YPF) have been rated as “buy” by 33%, 25%, and 100% of analysts surveyed, respectively. If you want broad-based exposure to the energy sector stocks, you can consider the Vanguard Energy ETF (VDE). The ETF has ~37% exposure to integrated energy sector stocks. Plus, VDE has ~26% exposure to the oil and gas exploration sector and ~10% exposure to oil and gas refining sector stocks.

Browse this series on Market Realist:

• Part 1 - Petrobras’s 1Q16 Earnings Were in the Red

• Part 2 - Petrobras’s Refining and Gas & Power Segments Stay Positive in 1Q16

• Part 3 - How Did Petrobras Allocate Its Capex in 1Q16?