Petrobras (PETR4) is not worth ‘buying’, assesses Ativa; analyst sees more attractive option

THE Activate Investments updated price targets for two stocks in the oil and gasbut followed with different recommendations for them.

The “neutral” recommendation was reaffirmed for the Petrobras (PETR4), which gained a target price of R$ 28. Ilan Arbetman, the analyst responsible for this Thursday’s report (26), cites the risks of the new governmentwhich intends to reduce the remuneration of the company’s shareholders to finance a plan with a greater focus on investments.

The analyst also raises the risk of changing the current price policy for derivatives of the company. He does not completely rule out changing the current implementation of the pricing policy (potentially no longer pegging it to international import price parity), but believes that Jean Paul Prateselected the new CEO of Petrobras, will opt for an intermediary solution, such as a stabilization fund for times of greater volatility in oil barrels. Petroleum.

“With the lean budget for 2023 and, thus, depending on the result of the state-owned companies, we believe that the government would be willing to consider or at least space out the changes to be promoted in the company”, evaluates Arbetman.

Ativa believes, however, that the changes will lead to lower operational efficiency, lower free cash flow and, consequently, less dividends.

“We believe that the discount that the company’s shares present to peers should, at least, remain close to the current one”, completes Arbetman.

The analyst assesses that relatively large changes in governance coming with changes in bylaws or in the State Law they can “contribute to the perpetuation of the discount of the company’s shares before peers”.

The oil company with “purchase”

Ativa reiterated its “buy” recommendation for PRIO (PRIO3), seeing in the company a “player ideal” to surf the positive perspectives for the sector (tight market, Chinese reopening and proactive performance of the OPEC to seek a market equilibrium under a price level that it considers positive).

In addition, the broker believes that the increase in production in the future, arising from East Albacore, Wahoo and
Friaris not fully priced.

“We see the shares of PRIO not yet having incorporated the benefits of the acquisition of Campo de Albacora Leste, the success of the revitalization of Frade (which can still be increased), the possibility of unitization of Trap with snorer and Itaipu with Whale Parkas well as, in parallel, the occurrence of new M&As (mergers and acquisitions)”, says Arbetman.

Ativa also says that it was satisfied with the end of negotiations between PRIO and Petrobras for the acquisition of West Albacore.

“We understand that the rationality of the operation must come above any other aspect and we believe that, at the moment, the company can envision other M&A opportunities in the market”, defends Arbetman.

The target price that the broker has for PRIO is BRL 46.