Petrobras Stock Is Now Too Undervalued (Rating Upgrade)

(11min)

Summary

  • I'm upgrading Petrobras (PBR) (PBR.A) to "Buy" due to its undervaluation amid strong production levels and disciplined financial control despite macro and idiosyncratic risks.
  • Brazil's tight monetary policy and fiscal concerns, along with lower refining margins, have pressured PBR's stock, but its fundamentals remain strong.
  • Petrobras' increasing production, high utilization rates, and healthy balance sheet support its ability to maintain high dividends and execute its $111 billion investment plan.
  • Despite risks, PBR's FCF yield of over 37% and significant undervaluation compared to peers justify a bullish outlook and the recent upgrade to "Buy".
  • Looking for a helping hand in the market? Members of Beyond the Wall Investing get exclusive ideas and guidance to navigate any climate. Learn More »

petrobras gas station

Joa_Souza

My Thesis Update

I initiated coverage of Petróleo Brasileiro S.A. - Petrobras (NYSE:PBR) (NYSE:PBR.A) here on Seeking Alpha in late May 2024, giving the stock a "Hold" rating as it seemed cheap indeed (both on the absolute

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This article was written by

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Oakoff Investments is a personal portfolio manager and a quantitative research analyst with 5 years helping readers find a reasonable balance between growth and value by sharing proprietary Wall Street information.

He leads the investing group Beyond the Wall Investing with features that include: a fundamentals-based portfolio, weekly analysis on insights from institutional investors, regular alerts for short-term trade ideas based on technical signals, ticker feedback by request from readers, and community chat. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in PBR, PBR.A over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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