Petrobras (PBR) Stock Falling as Moody's Says New Investment Plan Challenging

NEW YORK (TheStreet) -- Shares of Petrobras (PBR) are retreating 0.11% to $9.02 on Tuesday as Moody's says that the Brazilian state-controlled energy company's new investment strategy is challenging to accomplish, Barron's reports.

Yesterday, the Rio de Janeiro-based company came out with a new investment strategy to cut its five-year investment budget by 37% to $130 billion from $206.8 billion, Bloomberg said.

The company is urgently trying to reduce debt and recover investor confidence amid a corruption scandal, The Wall Street Journal reports. 

However, this plan is challenging to execute, given the size of assets to be sold, the uncertain policies for prices of oil products in Brazil and limited access to local large construction companies and equipment suppliers, Moody's analysts stated.

Additionally, analysts believe there is uncertainty regarding relaxation of local content rules as the company's assumption for Brent prices and exchange rate look reasonable at the moment.

Separately, TheStreet Ratings team rates PETROLEO BRASILEIRO SA- PETR as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate PETROLEO BRASILEIRO SA- PETR (PBR) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally high debt management risk, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

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