Brazil’s Petrobras stock falls 15% in April but analysts maintain bullish outlook

Shares in Brazil’s national oil company (NOC) Petrobras have fallen more than 15% in April, but several leading investment banks are maintaining their buy recommendations, citing attractive dividend yields and valuation metrics, InfoMoney reported.

The company's preferred shares have declined about 15% while ordinary shares have dropped around 18% since early April, when the US announced reciprocal tariffs and global oil prices retreated, with Brent and WTI crude both trading below $70 per barrel.

Despite the pullback, UBS BB analysts reiterated their buy recommendation, though they trimmed their target price from R$49 to R$46 to account for lower oil price forecasts.

"Petrobras underperformed, with concerns over capex (capital expenditure) in Q4 being followed by volatility in oil markets, where lower yields led investors to prefer other dividend-bearing companies in Brazil over the state-owned company," said Matheus Enfeldt at UBS BB.

The bank now projects a 2025 dividend yield of approximately 13% following the 15-20% share price decline.

UBS BB has reduced its Brent crude price projections by $6 to $66 per barrel for 2025, by $7 to $65 for 2026, and by $3 to $70 for 2027.

Capex remains a key concern for investors, with market estimates for 2025 ranging between $13bn and $16bn. UBS BB now forecasts cash capital expenditure of $14.8 billion.

Rico Investimentos also maintained its optimistic outlook on Petrobras, arguing that the oil price decline to $65 per barrel is less impactful than it might appear.

"The expected returns for Petrobras remain attractive, between 15% and 19%, considering Brent between $65 and $70 per barrel. Even in a more conservative scenario, with Brent at $60 per barrel, Petrobras' returns would be around 11%,” the analysts said.

They added that Petrobras shares are currently trading at a key technical support level of around BRL30 ($5.28), which they consider an attractive entry point.

Both USB BB and Rico Investimentos remain more cautious on smaller Brazilian oil companies like Brava Energia, which faces greater pressure from lower oil prices due to higher leverage and a cash flow breakeven price of approximately $60 per barrel.