(Bloomberg) -- Petroleo Brasileiro SA investors who’ve ridden a 25% rally in shares this year are now confronted with a wave of analyst downgrades on concern that below-market fuel prices and higher spending will erode what’s been a multibillion-dollar dividend bonanza.

Citigroup Inc., HSBC Securities and JPMorgan Chase & Co. have all downgraded the stock in the past week, ditching their buy-equivalent recommendations on worries about changes being made by the company’s new management team, which took over this year following President Luiz Inacio Lula da Silva’s election.

Analysts worry the state-run company’s new fuel-pricing policy, combined with the risk of a pickup in investment plans, will send debt levels soaring. Petrobras subsidized politically sensitive motor fuels the last time Lula’s party was in power, leading to concerns that the oil major will once again burn cash to help the country keep inflation in check.

Chief Financial Officer Sergio Caetano Leite invited sell-side analysts earlier this week for an in-person meeting to discuss the outlook for the company, according to people familiar with the matter. Fuel-prices and dividends were two of the main topics of the gathering, which took place on Thursday morning, the people said, asking not to be named because the information isn’t public. The meeting follows an earnings call on Friday.

Representatives for Petrobras didn’t immediately reply to an emailed request seeking comment on the meeting.

Petrobras would need to raise diesel prices by 36.2% and gasoline by 24% to reach import parity, according to financial services provider StoneX. Petrobras has said it is prioritizing competitiveness in the domestic market instead of import parity in a new pricing policy unveiled in May.

“We now watch for an increase in capex,” which adds to concerns about fuel prices and dividends, HSBC analyst Lilyanna Yang wrote in a report, downgrading the stock to hold from buy. “This could come at the detriment of near-term shareholder distributions.” 

The price decoupling brings “additional questions for the future scenario — mainly regarding who is going to import and supply the domestic demand with the current import window closed,” Citi analysts led by Gabriel Barra wrote in a report, cutting the stock to neutral from buy. 

Last month, the Brazilian oil giant set a more conservative policy for shareholder payouts, curbing dividends to 45% of free cash flow — from 60%. Lula had criticized the company for showering investors with cash instead of spending on priority projects such as refineries and renewable energy. Petrobras distributed over 190 billion reais in dividends for last year alone, more than any other oil company apart from Saudi Arabian Oil Co.

The company plans to earmark as much as 15% of total investments to low carbon projects that may reduce overall returns.

Preferred shares of Petrobras are down almost 20% from a peak in October, before Lula won the election. The stock is still up 25% this year, and some investors still see upside for the shares despite the lower dividends. 

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