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How Do Analysts Rate Shell?



Analyst ratings for Shell

We began the series with Royal Dutch Shell’s (RDS.A) Q2 2018 segmental earnings. In the previous part, we looked at how Shell stock reacted to its Q2 2018 earnings. Now, we’ll examine the analyst ratings for Shell post-earnings.

Post-earnings, Shell has been rated by a total of eight analysts. Of the total, seven analysts have assigned a “buy” or “strong buy” rating, one analyst has assigned a “hold” rating, and no one has assigned a “sell” or “strong sell” rating on the stock. Shell’s mean target price of $81 per share implies a 20% gain from the current level.

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Will majority “buy” ratings continue?

Shell has seen improvement in its overall financial position in the second quarter. Shell’s earnings have increased, net debt has reduced, and liquidity position has improved. Shell’s debt and liquidity position, which stood in an unfavorable position a few years back, now seems to be improving. Also, Shell’s strategy to reduce cost, optimize capex, and sell non-core assets have further supported the company in strengthening its financials.

Going forward, Shell should continue its efforts on debt reduction and liquids improvement by sticking to its strategy mentioned above. Thus, presumably, Shell’s majority “buy” ratings should continue in the near future.

Analyst ratings for peers

Integrated energy companies like BP (BP), ExxonMobil (XOM), and Chevron (CVX) have been rated as a “buy” by 50%, 30%, and 75% of analysts, respectively. Total (TOT), Suncor Energy (SU), and YPF (YPF) have been rated as a “buy” by 67%, 92%, and 83% of analysts, respectively.

In the next part, we will look at the Shell stock price forecast range for the next eight days.


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