Shell share price: Jefferies remains bullish on group ahead of strategic update

on Jun 3, 2016
Updated: Oct 21, 2019

Analyst at Jefferies remain bullish on Royal Dutch Shell (LON:RDSA) ahead of the group’s strategic update next week. The update would be the oil major’s first since its merger with former smaller London-listed peer BG Group (LON:BG), which completed earlier this year.

Shell’s share price has surged in today’s session, having added 1.35 percent to stand at 1,683.50p as of 12:47 BST, slightly outperforming the benchmark FTSE 100 index which is currently one percent better off at 6,247.18 points. The oil major’s shares have lost more than 13 percent of their value over the past year, but are up some 10 percent in the year-to-date.
Analysts at Jefferies reiterated their ‘buy’ rating on Shell today, with a price target of 2,040p on the stock, arguing that the group represents a shrewd investment.

“We believe Shell offers the most attractive valuation amongst the super-majors,” the broker’s analysts Jason Gammel and Marc Kofler said, as quoted by Proactive Investors, adding that the group was trading at a discounted valuation which the analysts argue is on account of the ongoing uncertainties surrounding the oil major’s acquisition of BG Group.
Jefferies comments come ahead of the Anglo-Dutch oil major’s Capital Markets Day on Tuesday, when the company is scheduled to update investors on its strategy. The analysts expect the update to be “long on thematics and short on specifics,” with the group likely to focus on plans to repair the balance sheet, balancing the organic cash cycle, as well as the quality of its deep-water and liquefied natural gas portfolios.
Proactive Investors quoted Gammel and Kofler as adding that “debt reduction is Shell’s highest priority for free cash flow” and that they were looking for some information on a sell-off programme they deem necessary to achieve a reduction in debt.
As of 13:10 BST, Friday, 03 June, Royal Dutch Shell Plc ‘A’ share price is 1,682.50p.