Petrobras Sinks With Ibovespa as UBS Cuts Profit Outlook by 80%

The outlook for Petroleo Brasileiro SA worsened further after UBS AG cut its earnings projection by 80 percent, spurring a slide in the oil producer at the center of Brazil’s largest graft probe. The Ibovespa followed a selloff in global stocks.

Shares of Petrobras extended a plunge over the past year to 63 percent, more than double the decline in the stock benchmark, after the Zurich-based bank said that a weaker currency may sap profitability. The Ibovespa has slumped 4 percent over the past three days, while the real led global losses.

Beset by a bribery scandal, years of disappointing drilling results and the collapse in crude, the world’s most-indebted oil producer has seen analyst earnings estimates plummeting by half over the past year. With Latin America’s largest economy set for the longest recession since the 1930s amid a meltdown in emerging markets, Petrobras has also joined the slide in the Ibovespa. The stock selloff has accelerated this week on speculation that Brazil’s credit rating will be cut to junk.

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