On Monday, Morgan Stanley (NYSE:MS) adjusted its stance on Petrobras (NYSE:PBR), downgrading the stock from Overweight to Equalweight and reducing the price target to $18 from the previous $20. The decision comes after a split decision regarding extraordinary dividends, which has led the analyst to adopt a more cautious approach.
The analyst cited the uncertainty surrounding the payment of extraordinary dividends as a reason for the downgrade. While acknowledging the potential for upside and a robust base dividend yield of approximately 12%, the firm believes that investors might hold off on increasing their stakes in the company until there is clarity on the distribution of funds from the remuneration account.
Morgan Stanley's revised price target of $18 reflects a more conservative outlook, down from the earlier $20 target. The firm's analysis suggests that the market is waiting for a more substantial dividend yield, potentially greater than 15%, before showing a renewed interest in adding to positions in Petrobras.
The change in rating and price target by Morgan Stanley is expected to influence investor perception of Petrobras, as market participants assess the impact of the dividend policy on the stock's value. The new Equalweight rating suggests that the stock is anticipated to perform in line with the sector or the broader market.
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