Patria downgraded its Unipetrol recommendation yesterday, to short- and long-term hold, from long-term buy and short-term accumulate. Although the stock may appear to be undervalued, we believe that the current market price for Unipetrol is justified due to the high level of stock-specific risk. While our value estimate is at CZK 65 per share, the great amount of uncertainty associated with privatization and post-privatization restructuring represents a downside risk for the stock. We believe that a wait-and-see strategy is the most appropriate at the moment.
(Jiri Soustruznik)