UPDATE: Bank of America Upgrades Petrobras SA to Buy, Raises PT on Reduced Risk Following 1Q Earnings

In a report published Monday, Bank of America analyst Frank McGann upgraded the rating on Petrobras SA

from Neutral to Buy, and raised the price target from $23.00 to $28.00. In the report, McGann noted, “We are upgrading Petrobras to Buy and raising our PO from...US$23.00 /R$22.50 for the non-voting ADR/local shares to US$28.00/R$27.50 to reflect reduced risk perceptions post stronger than expected first quarter earnings report and the approaching inflection point for both earnings and production that we expect to occur over the next several quarters. (1) Earnings are bottoming and set to enter period of growth; (2) 1Q13 eps came in ahead of est,, which should reduce risk for future results; (3) Production should grow from 2H13 and be among fastest vs. peers; (4) Political risk/reward looks more favorable; and (5) Valuation remains low in light of strong growth outlook.” Petrobras SA closed on Friday at $18.03.