Petrobras skepticism rises, says Citi

Petrobras (NYSE:) was cut to Neutral from Buy at Citi on Thursday, with a new price target of $14, down from $19 per share.

Despite HSBC also downgrading the stock to Hold from Buy, PBR’s share price has remained resilient, up 0.8% from Wednesday’s close.

Citi analysts said that for the past few years, the firm has seen PBR able to generate value for its shareholders via four main pillars, such as production growth supported by new pre-salt assets, balance sheet deleverage, a rational capital allocation, and a pro-business pricing policy.

“However, given the new administration’s view on price policy, dividends, and investments, our skepticism regarding the continuity of the ongoing and so-far successful strategy of the company based upon the pillars above has risen,” they wrote.

“At this point, we do not see enough space to see PBR performing strongly as the gap has closed in the recent past, supporting our neutral rating,” the analysts concluded.