UBS Cuts Outperforming OGX

UBS Pactual is downgrading to neutral OGX, which it says has been one of the best equity performers in Brazil and one of the strongest in the oil space. “Year to date, OGX is up 152% and now we no longer see the undemanding valuations that we saw in the last months,” says UBS. Relative valuation to its peers has closed and the upside from a few successful wells is no longer transformational, it adds. UBS sees FX strengthening offsetting higher oil, and now predicts BRL ending at 2.04 to the dollar, versus a 2.45 earlier forecast. Its target remains BRL1,263/share, versus BRL1,065 Wednesday. “We continue to see OGX as an excellent investment proposition,” says UBS.