Itaú BBA has raised its recommendation on independent oil producer Prio to ‘buy’, citing an attractive risk-reward profile amid a share price pullback and a more optimistic macroeconomic outlook for the Brazilian oil industry.
Itaú BBA has raised its recommendation on Prio to “buy”, saying the independent oil producer now offers a more attractive balance of risk and reward after a recent pullback in the share price. The bank set a price target of R$73 a share for the end of 2027, which implies upside of 27.1% from current levels, according to its note cited by Money Times.
Analysts led by Monique Greco argued that the stock still looks compelling even if crude remains near present levels. In their view, Prio’s share price implies Brent at about US$61 a barrel, while the company could still deliver returns to shareholders of more than 20% in more conservative oil-price scenarios. On Monday morning, the shares were trading higher and ranked among the Ibovespa’s biggest gainers as the broader index slipped.
The bank also updated its assumptions for the wider Brazilian oil and gas sector after second-quarter results and changes to its macroeconomic outlook. Itaú BBA lifted its Brent forecast to US$65 a barrel for the period it is now modelling, after previously using a far lower assumption, and said short-term volatility from geopolitics should gradually give way to fundamentals. The analysts said the market is likely to refocus on supply and demand, which they believe point to a well supplied oil market.
That view underpinned a reaffirmation of Itaú BBA’s buy rating on Petrobras, which remains its preferred name in the sector. The bank moved Petrobras’ target price to R$63 a share for December 2027 from R$64 previously for the end of 2026, still indicating a potential gain of 54.1% from last Friday’s close. The analysts said strong international refining margins could help cushion the impact of softer oil prices by supporting domestic fuel prices for longer.
For PetroReconcavo, Itaú BBA kept a neutral view and cut its target price to R$12 a share for December 2027 from R$16 for the end of 2026. The bank said production had remained below expectations in the second quarter, delaying the operational improvement needed to justify a higher valuation. It also said Brava Energia remains outside its published recommendation and target-price coverage because of restrictions.
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