Analyst ratings for Shell
We began this series with Royal Dutch Shell’s (RDS.A) 1Q18 earnings by segment. In the previous part, we looked at why the stock could have declined after 1Q18 earnings despite the earnings beat. Now we’ll look at the analyst ratings for Shell after the earnings release.
Shell is rated by a total of 11 analysts. Of that total, ten (91%) have assigned a “buy” or “strong buy” rating, one analyst has assigned a “hold” rating, and no one has assigned “sell” or “strong sell” ratings on the stock. Shell’s mean target price of $78 per share implies an 11% gain from the current level.
Why more “buy” ratings?
In the 1Q18 earnings, Shell’s management continued to focus on its aim of becoming a world-class investment. Shell has been working on its levers to improve its financial strength. The levers include reducing operating costs, cutting capital spending, divesting non-core assets, and delivering new projects on time and within budget. Shell has been using these levers for quite some time now to become more competitive, enhance financial performance, and produce returns at all points in an oil price cycle.
Plus, the company is focusing on bringing the gearing level in accord with an AA credit rating. The company’s 1Q18 performance shows that Shell’s strategy has started yielding results, with a notable year-over-year reduction in its net debt. Also, a year-over-year improvement in earnings implies that the company is rapidly approaching its goals.
So it’s no surprise that many analysts rate Shell a “buy.”
Analyst ratings for peers
Integrated energy companies BP (BP), ExxonMobil (XOM), and Chevron (CVX) are rated as a “buy” by 46%, 35%, and 77% of analysts, respectively. Other global players Statoil (STO), Suncor Energy (SU), and YPF (YPF) are rated as a “buy” by 20%, 93%, and 92% of analysts, respectively.
In the next part of this series, we’ll look at Shell’s stock price forecast range for the next eight days.