Barclays says buy Petrobras, sees huge discounted value ahead of elections

|About: Petrobras - Petroleo Brasil... (PBR)|By:, SA News Editor

The outlook for Petrobras (PBR +0.9%) will improve after the October election, no matter who wins, Barclays says as it upgrades shares to Buy from Hold with a $22 price target ($23 for PBR.A).

Barclays believes PBR is at an inflection point where it will enjoy some pricing control for a year or two after the elections, and that price hikes in favor of PBR could happen as soon as Q4 2014 or Q1 2015, with the president being able to allow price hikes sooner rather than later without risking too much political capital.

PBR is trading at a ~40% discount to its net asset value, Barclays says, seeing the discount shrinking to ~20% over the next 12-18 months; it thinks the company’s breakup value should still exceed $25/share even assigning zero value to its domestic refining operations.