Societe Generale has lifted its earnings forecasts for Royal Dutch Shell (LON:RDSA) for 2018 and 2019, Proactive Investors has reported. The move comes ahead of the oil major’s fourth-quarter results on Thursday.
Shell’s share price has fallen into the red in today’s session, having given up 0.67 percent to 2,505.00p as of 14:22 GMT. The stock is marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.80 percent lower at 7,609.81 points.
SocGen lifts earnings estimates
Societe Generale reiterated its ‘hold’ rating on Shell today, while lifting its earnings forecasts for 2018 and 2019, with the new levels, however, staying below market consensus. The move came as the broker also hiked its near-term oil prices for 2018/19, from $56/58bbl to $60/bbl.
“Our $60/bbl flat nominal oil price assumption is set below both the c.$64/bbl long-term historical average since 2000 and the current c.$70/bbl, as it aims to reflect the risk of “peak oil demand” and an energy transition away from fossil fuels, driven by government regulation and declining renewable costs,” the broker’s analyst Irene Himona explained, as quoted by Proactive Investors.
Share buyback timing
The comments come ahead of Shell’s results on Thursday, and SocGen sees material changes to the group’s targets as unlikely with the company having set its new strategic targets at its Capital Markets Day in November. The analysts, however, note that since Shell abolished its scrip dividend as of 4Q17, one remaining question for management was over the timing of the share buyback.
“We assume it starts in 2019, but as this is already reflected in the numbers, clarifying the start up would only be a modest catalyst for the shares, in our view,” the broker pointed out, as quoted by Proactive Investors.