Prio (Prio3): BTG Cuts target price, but still provides high of 66% and cites potential dividends

BTG Pactual reduced the target price for prio shares (Prio3), from R $ 68 to R $ 65, which still represents a potential of 66% over the last closure. The review occurs after the bank adjusts its projections to incorporate the acquisition of the remaining 60% of the Pilgrim.

The purchase, announced for US $ 3.5 billion (or approximately US $ 2.3 billion after cash adjustments), reinforced the portfolio of Prio and should improve its generation of cash. But BTG adopted a more conservative stance over the price of Brent oil, reducing the long -term forecast from $ 70 to $ 65 per barrel.

“Despite macroeconomic risks, we see the recent performance below the averaging (-25% in US $ in the last 12 months) as an opportunitywith the action offering one of the most attractive risk-rector profiles in our coverage, ”said analysts Luiz Carvalho and Henrique Pérez.

Analysts project a EBITDA From US $ 1.7 billion to a prio in 2025 and US $ 3.1 billion in 2026, with a free cash flow for the $ 822 million shareholder (FCFE) and $ 1.3 billion, respectively. BTG provides for a 64% FCFe income between 2026 and 2027.

The potential return of prio

The bank also pointed out that, despite the significant disbursement for the purchase of pilgrim, the asset is already in the phase of cash generation, with estimated Payback in less than three years.

In addition, he said, a prio remains committed to reducing operating costs and improving assets’ efficiency, which may further increase the return on investment.

The BTG also points out that, although there are risks, such as the volatility of oil prices and regulatory issues, the prio has proven to be proactive in obtaining environmental licenses, especially for the development of the east Albacora field.

The positive view of the bank is supported by other factors, such as the production potential higher than expected and the possibility of ‘consistent’ distribution of dividends from 2027.