According to the Zhitong Finance APP, on Monday, Morgan Stanley raised its rating on Petrobras (PBR.US) shares from 'hold' to 'buy' and raised its target price from $18 to $20. The stock rose 8.9%. Morgan Stanley said that the company's cash flow is very strong and can maintain dividend distribution even in a challenging market environment.

Morgan Stanley analyst Bruno Mantanari said he 'firmly believes' that Petrobras has the best offshore oil assets in the industry, as well as 'unparalleled' well productivity, lower capital and production costs. But compared to global peers, its key difference lies in its strong ability to generate cash, which will provide 'enough funds for dividends in the coming years.'

Mantanari wrote that Petrobras' stock price has fallen 17% since earlier this year and has remained basically flat over the past five months, but the volatility, combined with changes in company management, is expected to gradually dissipate the various noise and may eliminate some of the volatility factors.

The analyst said that the information conveyed in recent conference calls and meetings by the new CEO and CFO has convinced him that as long as the company has enough cash to use, it should maintain strategic continuity, while responsibly increasing investment and dividend distribution.