JP Morgan dealt Ecopetrol's stock a crushing blow when it announced that it was reducing the price projection for this asset between now and December 2025. The oil company is the largest Colombian company.

According to the firm, the company's outlook is no longer "neutral" but "underweight" with a share price target of US$8.50 by the end of 2025.

The announcement immediately knocked down the price of Ecopetrol's ADRs on the New York Stock Exchange to the US$8 level, from the US$12 it traded at in April of this year.

A series of announcements about the company's future made by the current administration cast serious doubts on Ecopetrol's ability to maintain current production rates and its capacity to generate margins.

In line with President Gustavo Petro's announcements, the company's CEO, Ricardo Roa, and its board of directors have made decisions such as withdrawing from a previous agreement with Occidental Petroleum to enter the Crownrock project in the U.S. Permian Basin, considering that the oil company must move its operations towards sustainable energy.

However, as Investing.com points out, it must also be considered that the markets have shown an overreaction and that there are objective reasons to believe that at current price levels, the stock is undervalued.

“In light of JPMorgan's downgrade of Ecopetrol SA, a look at real-time data from InvestingPro reveals additional insights that may be of interest to investors. The company's adjusted market cap stands at $19.03 billion, with a notably low price-to-earnings (P/E) ratio of 4.73, suggesting that the stock could be undervalued compared to earnings. Additionally, Ecopetrol's dividend yield is remarkably high at 38.04%, reflecting a substantial return to shareholders through dividend payments,” says the Investing.com portal.

Ecopetrol is one of the main assets of Colombians, considering that 88% of its shares are held by the State and that it is a permanent source of dividends for public finances.

Last year Ecopetrol's profits were COP$19.1 trillion (close to US$4.75 billion) which, although they fell, represent a good injection of liquidity into the public coffers and into the pockets of private shareholders.