UBS analyst Luiz Carvalho last night double downgraded Petrobras to Sell from Buy with a price target of R$22, down from R$47. The analyst expects an “upcoming switch in the company’s direction.” The upcoming years are “looking more somber than the heights Petrobras has reached,” Carvalho tells investors in a research note. Under Brazil President-elect Luiz Inacio Lula da Silva, the analyst has become “substantially more cautious” given early comments from Lula’s transition team. Petrobras’ recent years of debt reduction and significant dividend payments are “on a path of reversion” and higher investments pose a key risk, contends Carvalho.
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