Credit Suisse Starts Petrobras (PBR) at Underperform; $2 PT

(Updated - January 12, 2016 9:06 AM EST)

Credit Suisse initiated coverage on Petrobras (NYSE: PBR) with an Underperform rating and a price target of $2.00

The analyst said investors would have to believe ten things for the stock to be fairly valued at the current levels, with no margin of safety.

1) the company will divest $43bn at a premium to fair value and reduce opex by $12bn; (2) Brent prices will more than double to c.$80/bbl by 2020; (3) fuels will be priced 10% above import parity despite market-share loss; (4) no further BRL depreciation; (5) production will reach 2020 targets; (6) capex will decrease by $15bn in four years with no impact in production; (7) no new projects will be executed; (8) no new cash drain will happen ("Car-Wash" settlements, tax disputes, etc.); (9) the c.$91bn funding needs will be fully addressed; and (10) all this will happen at the same time.

The analyst sees no easy way out.

For an analyst ratings summary and ratings history on Petrobras click here. For more ratings news on Petrobras click here.

Shares of Petrobras closed at $3.71 yesterday.

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