2024-05-28 04:41:52 ET
Summary
- For many months, Petrobras stock traded at a significant discount due to the substantial risk posed by its location in an opaque economic zone, despite its high-quality assets.
- Recent events (such as the firing of now-former CEO Jean Paul Prates about 2 weeks ago) have increased these risks further, in my opinion.
- I understand the bulls' argument that Petrobras stock looks cheap, as my comps valuation calculations show - the upside potential could be more than 50% if we disregard political risks.
- However, I see no reason to neglect these risks today. The discount to Petrobras' valuation is likely to remain the same or even widen.
- In light of these points, I think it's prudent to wait for lower prices for Petrobras stock or avoid it altogether, given the significantly increased risks. My rating is "Hold".
My Thesis
Read the full article on Seeking Alpha
For further details see:
Petrobras: It's Hard To Be Bullish Now