Why Petrobras (PBR) Stock Is Down Today

NEW YORK (TheStreet) -- Petrobras  (PBR) continued to fall Wednesday after the Brazilian state-run oil producer found more oil than expected at four of its deep water wells, but investors realized almost half the money would go to the government rather than shareholders.

The company is considering selling up to $11 billion in assets to shield itself from billions of dollars in additional payments to the Brazilian government in the next five years thanks to the exploration's success, according to Bloomberg.

Banco Bradesco SA and UBS AG each downgraded Petrobras to the equivalent of "hold" from "buy" after the Brazilian government said it would sell approximately 15 billion reais, or $6.7 billion, of new offshore oil rights to the most indebted producer in the world.

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Morgan Stanley also downgraded Petrobras to "hold" from "buy" and reduced its price target to $16 from $17.

The stock was down 1% to $14.83 at 12:19 p.m.

Separately, TheStreet Ratings team rates PETROBRAS-PETROLEO BRASILIER as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate PETROBRAS-PETROLEO BRASILIER (PBR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow."

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