XLE - Petrobras: I Was Truly Wrong About Its Resilience And Headwinds (Rating Upgrade)
2024-02-18 08:30:00 ET
Summary
- Petrobras investors have outperformed their energy sector peers and the S&P 500.
- Concerns over government interference in Petrobras might have been overstated. Petrobras remains committed to being a global E&P player in the core energy sector.
- The market is confident in Petrobras' ability to balance traditional oil operations with investments in renewable energy.
- I was too cautious in my previous thesis on PBR, behooving a reassessment of my view. I was wrong, as PBR has proved its remarkable resilience.
- I explain why I believe it's still timely for me to upgrade my thesis, as I remain bullish over attractive-valued energy plays like PBR.
Investors in Petróleo Brasileiro S.A., or Petrobras ( PBR ), have continued to outperform their peers represented in the energy sector ( XLE ) and the S&P 500 ( SPX ) ( SPY ) since my last update in November 2023. As a result, I have reassessed whether my caution over PBR could have been overstated, given its highly attractive valuation (assigned "A-" valuation grade by Seeking Alpha Quant). With an "A" momentum grade, PBR investors have continued to ride robust buying sentiments as the Brazilian economy has remained remarkably resilient . Even President Lula has had a solid start to 2024, as his approval ratings climbed. Brazil's central bank has continued its interest rate cuts in January , corroborating the effectiveness of its monetary policy against high inflation rates....
Petrobras: I Was Truly Wrong About Its Resilience And Headwinds (Rating Upgrade)