The U.S.-listed shares of Petroleo Brasileiro S/A sank 3.3% in very active afternoon trading Tuesday, putting them in track for the first sub-$10 close in exactly a year, after UBS swung to bearish on the Brazil-based oil and gas giant, citing concerns over “three transformational points”: fuel prices, investments and overhead. Trading volume swelled to 49.1 million shares, making the stock the most actively traded on the New York Stock Exchange (NYSE). Analyst Luiz Carvalho doubled downgraded the stock to sell from buy, while slashing his price target by more than half, to $8.50 from $18.10. “On fuel prices, there is no definition of the company’s new pricing policy, and we expect refining margin compression,” Carvalho wrote in a note to clients. “We also think a key risk lies in higher investments as, in the past, Petrobras was unable to diversify from non-core integrated oil profitability, a trend that could potentially return.” He added that diversification into renewables and energy transition would require the company to become larger, and overhead becomes a concern. The stock has tumbled 29.6% over the past three months, while front-month crude oil futures hvae dropped 8.9% and the S&P 500 has shed 3.6%.
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