The shares of Petrobras (PETR4) are not “cheap enough”, despite the support that the dividends (albeit smaller) could offer for the thesis of the state-owned company, evaluates the BTG Pactual.
The bank reiterated the “neutral” rating for the shares, with a target price of BRL 35.70, after the approval of Jean Paul Prates by the board of directors to be the new president of Petrobras.
While approval was expected, investor appears to have reduced confidence that the current executive board will provide the checks and balances investors have been hoping for, says BTG.
For analysts, this leaves room for more noise about the possibility of changing the pricing policyshareholder compensation and the investment plan (which may gain greater focus under the new management).
“The general inability to outline a clear strategy for the company hampered the market’s ability to come to a conclusion about the current fair multiples of the share,” say analysts Pedro Soares, Thiago Duarte and Bruno Lima, in a report published this Friday. (27).
Action is not cheap
In BTG’s assessment, the action is not cheap “in many likely scenarios”.
According to the institution’s base scenario, Petrobras should return to growth mode, reducing the payment of dividends from now on.
Currently, the company’s dividend policy considers 60% of operating cash flow less capexwhich would imply a dividend yield of 23% in 2023, according to BTG.
In the event of a change in Petrobras’ dividend distribution policy to a smaller payoutBTG assumes that the state-owned company will distribute between 25-50% of profits in 2023, which would imply a dividend yield of 9-19%.
“It could offer relevant support for the story, but it is not too far off from many of its global peers and other names in commodities in Brazil”, comment the analysts. For comparison purposes, Soares, Duarte and Lima mention that the OK (VOUCH3) is trading close to 10-11%.
For BTG, the arrival of gringos on the Brazilian stock exchange and oil prices still high are the main triggers for a good performance of Petrobras shares. That works, but not for long, he says.
“We note that high oil prices will eventually increase pressures on commodity prices. fuels in Brazil, consequently increasing the political noise around the company’s fuel pricing policy”, explain Soares, Duarte and Lima.
Analysts reinforce that betting on Petrobras now is “extremely risky”.
Source: Moneytimes
I am an author and journalist with a focus on market news. I have worked for a global news website for the past two years, writing articles on a range of topics relating to the stock market. My work has been published in international publications and I have delivered talks at both academic institutions and business conferences around the world.
