UPDATE: Morgan Stanley Downgrades Petroleo Brasileiro Petrobras SA On Limited Upside

In a report published Wednesday, Morgan Stanley analyst Bruno Montanari downgraded the rating on Petroleo Brasileiro Petrobras SA (NYSE: PBR) from Overweight to Equal-Weight, and lowered the price target from $17.00 to $16.00.

In the report, Morgan Stanley noted, “The decision of the government to contract PBR to operate the exceeding volumes from the Transfer of Rights (ToR) was a negative one. Non-discretionary incremental barrels increase future capex, which is a concern. We see limited upside to our target and move to the sidelines at Equal-weight.”

Petroleo Brasileiro Petrobras SA closed on Tuesday at $14.98.