Shell share price subdued as Societe Generale trims rating

Analysts argue buyback is priced in the shares

Shell share price subdued as Societe Generale trims rating

Shares in Royal Dutch Shell (LON:RDSA) have fallen into the red in today’s session, as analysts at Societe Generale lowered their stance on the Anglo-Dutch oil major. The move came after the broker lifted its Brent oil price marker for the current year.

As of 14:04 BST, Shell’s share price had lost 0.22 percent to 2,663.00p, underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.12 percent higher at 7,696.17 points. The group’s shares have added just under a quarter to their value over the past year, as compared with about a 2.3-percent gain in the Footsie.

SocGen trims stance on Shell

Societe Generale lowered its rating on Shell from ‘buy’ to ‘hold’ today, following its move to lift its Brent oil price marker for 2018 up by 23 percent to $74 per barrel. Proactive Investors quoted the broker’s analyst Irene Himona as explaining that while the Anglo-Dutch oil major’s earnings and cash flow will see material increases as a result of higher crude prices, it is seen less favourably  than other more leveraged peers such as BP Plc (LON:BP).

Buyback priced in

“Shell remains a core holding; it is widely liked and owned,” the analyst pointed out, adding, however, that “having announced the end of the scrip dividend from 2018 early on, it has now been overtaken and is clearly late in starting the 2018-20 buyback of the $25bn promised back in 2015”.

“We believe the market fully expects and therefore prices in that buyback. Once it does start, there should be short-term relief, but no real surprise,” Himona continued, noting that a further delay in the buyback would be a negative trigger for Shell’s share price.

As of 15:05 BST, Wednesday, 06 June, Royal Dutch Shell Plc 'A' share price is 2,663.00p.

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