Shell share price outperforms as RBC hikes rating on group

on Jan 4, 2017
Updated: Oct 21, 2019

Shares in Royal Dutch Shell (LON:RDSA) have advanced in London in today’s session, outperforming a flat market, with analysts at RBC Capital Markets turning bullish on the Anglo-Dutch oil major. The rating upgrade is a boost for the FTSE 100 company which is currently trimming its non-core assets in an effort to shore up its balance sheet.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

As of 13:28 GMT, Shell’s share price had added 0.64 percent to 2,270.50p, outperforming the blue-chip FTSE 100 index which was 0.01 percent worse off at 7,177.16 points. The group’s shares have gained just under 50 percent over the past year, as compared with about a 17-percent rise in the Footsie.
RBC Capital lifted its stance on Shell from ‘sector perform’ to ‘outperform’ today, keeping its price target on the shares unchanged at 2,500p. The analysts argue that the recent OPEC and non-OPEC supply deals have put the oil market on a much firmer footing, removing some of its tail-risk concerns for the energy major.

“Looking ahead, we see the potential for strongly improving cash flow generation, while in the near term, we believe net debt should begin falling from its peak,” the broker pointed out, as quoted by Sharecast. “The recent OPEC/non-OPEC supply deals have effectively provided an environment where we believe this is unlikely, while we are also seeing signs of improving macro conditions for European gas, where Shell has the second highest exposure in the peer group.”

The analysts further pointed out that the Anglo-Dutch group is past the point of peak net debt and its balance sheet will improve going forward, giving the potential for the dividend yield to contract. RBC also notes that Shell can outperform peers if it can continue to deliver on its divestment programme. The FTSE 100 group has unveiled plans to offload $30 billion worth of assets as it looks to shore up its balance sheet in the face of the weaker oil price environment and following the acquisition of BG Group.
As of 13:32 GMT, Wednesday, 04 January, Royal Dutch Shell Plc ‘A’ share price is 2,270.50p.


Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals™.

Learn more
Energy & Power Stock Market