UBS cuts Petrobras target price, citing opaque pricing formula


UBS is a Petrobras (PBR -1.8%) bull with a Buy rating, but it cuts its target price on the shares to $17.04 from $17.89, cutting its 2013-17 EPS estimates by between 3%-9% each year in lieu of clear adherence to the company's undisclosed pricing formula.

PBR recently raised fuel oil prices by 15%, but it is diesel/gasoline (70% of volumes, 20% discount to import parity) that matters most, the firm notes.

The valuation of PBR is so suppressed that the $17 price target implies only 50% of net asset value, UBS calculates.

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