Analysts from Merrill Lynch have recently shed some light on U.S. solar leader SolarCity Corp (NASDAQ:SCTY), and Brazil’s state-run oil maker Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR). While SolarCity holds a bullish outlook due to its promising first quarter results, Petroleo Brasileiro consensus remains neutral in light of recent current events involving potentially higher oil prices and changing conditions in Brazil.

SolarCity Corp

SolarCity has received bullish outlooks in light of the company’s recent financing announcements. Merrill Lynch analyst, Krish Sankar has reiterated a Buy rating on the stock with a $40 price target.

SolarCity’s recent financing documents have shown strong progress, including a $150 million commercial solar and storage aggregation facility. Further, the documents include a $188 million tax equity fund. Both of these findings are positive indicators of the company’s ability to deliver on its 2016 plan, according to the analyst. Sankar mentions, “We estimate that the company currently has the tax equity and non-recourse debt capacity to finance installations through early 3Q16.”

In spite of these positive indications, the analyst notes that there is still much work to do in the long term. He explains, “We estimate that SolarCity needs to raise roughly $1.9B in incremental financing to deliver CY2016 guidance of 1,250MW. This includes about $1.2B in remaining tax equity capacity, and roughly $700M from additional sources.” The analyst elaborates further, “Our estimate for total remaining financing necessary includes consideration of roughly $150M of current non-recourse debt due in 2016. In our view, the balance of proceeds net of tax equity will be raised using a combination of non-recourse debt and cash equity.”

Considering the fact that SolarCity has been able to raise financing in the first quarter of the year, the analyst confirms his positive stance explaining, “We remain confident that it can amass the project financing necessary to deliver on plan. The company has raised over $300M in tax equity proceeds YTD, and an  additional $440M in various forms of non-recourse debt.”

According to TipRanks, Krish Sankar has a 40% success rate recommending stocks with an average loss of  7.4% per recommendation. Based on 13 analysts who have rated SCTY in the last 3 months, 7 gave a Buy rating, 1 gave a Sell rating, and 5 remain on the sidelines. The average 12-month price target for the stock is $45.45, marking a 62% upside from where shares last closed.

Petroleo Brasileiro SA Petrobras (ADR)

Merril Lynch analyst Frank McGann reiterated a Neutral rating on the stock, with a new price target of $4.00, versus the prior estimate of $4.50. According to the analyst, valuation for the company might be aided by improving oil price and political outlook.

McGann notes that although the enterprise has one of the strongest long-term growth stories among global oils, the near term rising macro-risks may limit the upside for shares.

Key concerns, according to the analyst, are primarily oil prices, political volatility, and class action suits. McGann notes higher valuations for PBR can be improved via potential asset sales, which, according the analyst, “could provide some relief to an over-stretched balance sheet.” However, despite this potential, McGann claims, “We reiterate our Neutral rating, given concerns for volatility for both oil prices and politics, and uncertainty related to potential negative effects related to U.S. class actions suits and on-going investigations in the U.S./Brazil.” He elaborates further mentioning, “Although Petrobras’s stock could be of interest to those willing to look beyond these risks, we think the risks are sufficiently high to warrant a Neutral rating.”

Historically, PBR’s valuations tended to correspond with periods when perceived country risk in Brazil experienced important changes. Four key periods influenced important points of inflection, including: the opening of the oil sector in Brazil in the 1997-2000 period; the period prior to the 2002 presidential election; the post 2002 presidential election; and finally, the presidential election period in 2014.

In 2014, PBR experienced a peak in valuation of 10.0x on forward EV/DACF. Since then, the multiple has declined sharply, with shares for the stock currently trading at 6.5x EV/DACF according to the analyst’s 2016 estimates. McGann elaborates on this further, claiming, “the drop is due, in our view, to rising challenges facing the company.” These challenges include a sharp rise in debt levels, exacerbated by weaker oil price environment and the loss of investment grade status to the company. Additionally, the unclear outlook for U.S. class action suits is a major uncertainty.

According to the analyst, valuation is not challenging in a long-term view. McGann explains, “In addition, we think the valuation of Petrobras’s shares is not challenging on an EV/DACF (Debt-adjusted cash-flow) basis. We define Debt-adjusted cash-flow as net income plus depreciation plus after-tax interest. Currently, the stock is at the lower end of its historical range in 2008-2016.”

According to TipRanks, out of the 6 analysts who have rated the company in the past 3 months, half are bearish and half remain on the sidelines. The average 12-month price target for the stock is $4.70, marking a 18.26% downside from where shares last closed. Frank McGann has a 0% success rate recommending stocks with an average loss of (33.3)% per recommendation.