Erste, which up until last year would recommend Petrom shares as having major growth potential in the region, now says that although they seem attractively evaluated, Petrom shares do not have real short-term growth potential.
Erste analysts have cut their price target for Petrom shares from 0.5 lei to 0.47 lei and have changed their recommendation from “buy” to “hold”, while Petrom’s stock exchange price was RON0.4585/share on Monday.
Erste’s report was published a few days after the report of Swiss Capital, the largest brokerage on the Romanian market, which recommended investors to “buy” Petrom shares and set a price target of RON0.54, 18% more than the current stock exchange price. Swiss Capital analysts believe the increase in the price of gas will boost Petrom’s profit, despite the new tax announced by the Government.
Looking back, Petrom shares have not exceeded the RON0.5/share mark in five years, despite the record-high profits reported by the company and the natural gas discovery made in the Black Sea. Not even the gas price liberalization schedule announced by the Government was able to drive the share price beyond RON0.5.
For the coming few years analysts are looking with concern at the renegotiation of royalties that the company will pay to the state starting at the end of 2014.
(English version by Daniela Stoican)