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Petrobas and Its Analysts: Are Ratings Improving?

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Nov. 20 2020, Updated 3:36 p.m. ET

Analyst ratings for PBR

In this series, we’ve looked at Petrobras’s (PBR) production update, valuations, short interest position, and implied volatility. Now let’s look at the changes in analyst ratings for the stock.

As of January 11, 2017, Petrobras (PBR) has been rated by 18 analysts. Four of them rated the company a “buy” or “strong buy.” These ratings have remained stable compared to December 2016. But ratings have improved compared to a year ago on January 11, 2016, when the company had five “sell” ratings, ten “hold” ratings, and only one “buy” rating.

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Analyst ratings improved in 2016, likely due to measures such as cutting capex (capital expenditure), reducing operating costs, and divesting non-core assets. These measures were probably Petrobras’s attempt to evolve into a financially stronger and socially responsible company. For more on this, please refer to What Does Petrobras’s Strategic Plan Reveal?

PBR’s improvement plan

The company’s plan was not only to improve its leverage position but also to gain credibility with its stakeholders. As part of this plan, the company appointed Pedro Parente as its new CEO (chief executive officer) in May 2016. For more on this, please refer to Will Petrobras’s New CEO Be Able to Steady the Ship?

Other integrated energy majors such as ExxonMobil (XOM), Chevron (CVX), BP (BP), and Royal Dutch Shell (RDS.A) have taken similar measures such as streamlining business value chains, exiting non-strategic portfolios, reducing cost structures, and focusing on improving cash flows.

For exposure to integrated energy stocks, you can consider the iShares US Energy (IYE). The ETF has a ~40.0% exposure to the sector.

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