Petrobras (NYSE:PBR) shares plummeted by nearly 8% today after the Brazilian energy giant’s CEO, Jean Paul Prates, was ousted by the country’s government. With a 50.3% stake, the Brazilian government is the largest shareholder in Petrobras.
Turn of Events at Petrobras
Prates’ ouster follows a decline in PBR’s net profit in the first quarter, resulting in reduced dividend payments by the company. This week, PBR reported a nearly 38% decrease in its bottom line due to lower sales and oil prices, resulting in a nearly 15% decline in its top line during this period. Additionally, Petrobras announced dividends and interest on equity totaling $2.61 billion; however, the distribution amount fell short of Street expectations.
Now, Brazil’s President, Luiz Inacio Lula da Silva, is replacing Prates with Magda Chambriard, the former Chief of Brazil’s energy regulator ANP. The shakeup at Petrobras’ upper echelon is also a response to the government’s push for lower fuel prices and reduced dividend payouts, contrary to the desires of its investors.
Could Weigh on its Dividends and Share Price
Earlier this year, Petrobras’ board had initially withheld an additional dividend payment. However, the dividend payment was subsequently approved in April. The current developments could indicate lower dividend payments from Petrobras in the coming periods, a factor that had positioned Petrobras as a favorite among investors in recent years.
What Is the PBR Stock Price Prediction?
Today’s price decline comes after a mega 326% rally in Petrobras’ share price over the past three years. Overall, the Street has a Moderate Buy consensus rating on the stock, alongside an average PBR price target of $18.29.
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