The loss in value has largely associated with the uncertainty on the share offering. However, it appears all the negativities that can drive the stock low are priced in. With the potential reserves and organic growth, why is this stock so depressed? Any chance it will get back to $45 range by year end? Any thoughts will be appreciated.
It is moving nicely up since they have announced the price they would have to pay per bbl and the size of the stock offering. Today's volume is rather high, for a day which is traditionnally very quiet.
$50 may still be out of reach for this year but $45 should be possible.
No way this stock will get its mojo back. Lula, by pricing the oil at $8.51 for the oil for share swap just screwed it up. It's over. Buy oil in Colombia (sam story as Brazil but with better regulatory framework) or buy stocks that will benefit from PBR's exploration efforts like Tenaris (TS).
Thanks for the inputs.
It's just difficult to see how the price being so depressed and today yet another 3% drop from nowhere.
Would you suggest to keep it for the long haul, hoping it will go back to $40 range? Or cut the loss and move on?
Several negatives seem to be at work here. First, there's concern deep water drilling is a lot more risky than previously thought. The risks are no greater now than before the BP disaster, but they have brought a whole new awareness to the situation. Secondly, there's concern about possible dilution caused by a secondary stock offering. PBR is and has always been controlled by the Brasilian government, and they can do pretty much whatever they want. However, I doubt that they want to destroy the value of a company that is enormously important to the country's economy. Short term, PBR could remain under some pressure, but I still see it as an excellent long term investment in the overall growth of Brasil. I'm not sure $45 is in the cards by year end, but I would expect to see it sometime next year. For the time being, enthusiasm for PBR seems to have waned considerably. It might be best to put together a basket of Brasilian stocks such as VALE, ITUB, GOL, etc., all of which I own personally.