Shell share price rises as RBC lifts valuation on group

Shares in Royal Dutch Shell (LON:RDSA) have advanced in London this morning, after analysts at RBC Capital Markets lifted their price target on the stock and reiterated their bullish stance on the Anglo-Dutch oil major. The move came after the FTSE 100 company updated investors on its strategy yesterday, flagging steeper cost cuts following its tie-up with BG Group.

As of 10:24 BST, Shell’s share price had gained 1.68 percent to 1,785.50p, as compared with a 0.02-percent dip in the benchmark FTSE 100 index. The group’s shares have lost some six percent of their value over the past year, but are up just under 17 percent in the year-to-date.
RBC Capital raised its price target on Shell from 1,900p to 2,000p today, while reiterating its ‘outperform’ rating on the stock, in the wake of the group’s strategy update yesterday when the oil major unveiled plans to leave up to 10 countries and offload up to 10 percent of its oil and gas production. Shell further pledged to keep annual spending below $30 billion until the end of the decade and cut its planned capex for the current year for a third time to $29 billion.

“Management’s hardceiling on capex is a clear positive, in our view, although this commitment is likely to be tested over time,” RBC was quoted as saying. “We think Shell’s focus on dividend sustainability means additional capex will have to compete with the buyback programme from now until 2020.”
The analysts added that they continued to believe that the Anglo-Dutch oil major had some of the best project optionality in the peer group following BG’s acquisition.
“We remain positive, and think Shell should remain a core energy holding for longer term investors,” RBC concluded.
As of 10:54 BST, Wednesday, 08 June, Royal Dutch Shell Plc ‘A’ share price is 1,785.50p.