What to Expect From Petrobras Earnings

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Petróleo Brasileiro S.A. (NYSE: PBR), better known as Petrobras, is set to release its second-quarter earnings report. The consensus estimates from Thomson Reuters call for $0.13 in earnings per share on $21.96 billion in revenue. In the same period of last year, Petrobras posted earnings of $0.03 per share and $26.02 billion in revenue.

In the previous quarter, Petrobras attributed its loss to higher interest costs, unfavorable currency exchange rates and lower production. The tumble in operating earnings reflected lower gross earnings of 6% due to an 8% decline in domestic demand and lower oil prices. The company also sold less natural gas and faced lower demand for electricity generation.

A Raymond James analyst said at the beginning of the summer that Petrobras should be avoided, and the firm downgraded its official rating to Underperform from Market Perform. The firm thinks it is a pipe dream investors are buying now, and the 56% gain has not been on the fundamentals. The analyst fears about the $100 billion or more in debt will hinder its ability to operate normally, even though Petrobras cannot operate normally as a state-run entity. However, the stock has only gained since that time.

A few analysts weighed in on the stock during the second quarter:

  • Barclays has an Underweight rating with a $9 price target.
  • Morgan Stanley has an Overweight rating with a $9.50 price target.
  • Credit Suisse reiterated a Sell rating with a $2 price target.
  • JPMorgan has a Neutral rating.

So far in 2016, Petrobras has vastly outperformed the broad markets, with the stock up nearly 100%. Over the past 52 weeks, the stock is only up about 35%.

Shares of Petrobras were trading up 1.3% at $8.54 on Thursday, with a consensus analyst price target of $5.73 and a 52-week trading range of $2.71 to $8.85.