Ecopetrol SA: Buy Rating Reaffirmed Amid Political and Economic Tailwinds

In a report released today, Andres Cardona from Citi upgraded Ecopetrol SA (EC – Research Report) to a Buy, with a price target of $14.00.

Andres Cardona has given his Buy rating due to a combination of factors that suggest potential positive outcomes for Ecopetrol SA. The recent political events have prompted investors to engage in an ‘election trade,’ which could benefit Ecopetrol’s stock. Despite ongoing concerns about political influences on the company, the anticipation of new oil exploration rounds and a more favorable economic environment under a new administration are seen as positive developments.
Furthermore, Cardona has updated his financial model to reflect a lower WACC assumption and higher future oil prices, which contribute to a higher target price for the stock. The increase in the midstream multiple and inclusion of probable reserves in the core NAV also indicate potential for valuation rerating. While there are structural challenges and risks, such as potential asset divestitures and fiscal pressures, the overall outlook suggests substantial upside potential for Ecopetrol, justifying the Buy rating.