It's time to buy Petrobras on the strength of its dividend potential, Morgan Stanley said Wednesday. "PBR has been a strong performer YTD, but we see further room for capital appreciation," Montanari wrote. "And the potential total return — 51% after a ~16% dividend yield — looks compelling enough to us to justify a more positive stance on the stock in 2023." "Our new estimates, using lower oil prices form the current forward curve, have PBR still generating [free cash flow] of $23B in 2023, a 30% yield," Montanari wrote. During Wednesday premarket trading, Petrobras shares gained 1.9%.

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Persons: Morgan Stanley, Bruno Montanari, YTD, Montanari, outpacing Brent, — CNBC's Michael Bloom Organizations: Petrobras, Montanari Locations: U.S