Why Analysts Are Bullish on Shell

Analyst ratings for Shell

In this series, we’ve reviewed Royal Dutch Shell’s (RDS.A) Q2 2018 estimates, segment-wise prospects, stock returns, and stock price forecast ahead of its expected earnings release on July 26, 2018. In this article, we’ll assess analyst ratings for Shell.

Why Analysts Are Bullish on Shell

Nine analysts are currently covering Shell (RDS.A). Eight analysts have assigned a “buy” or “strong buy” rating to the stock, and one has assigned a “hold” rating. ExxonMobil (XOM), Chevron (CVX), and BP (BP) have been rated as a “buy” by 33%, 76%, and 45% of analysts, respectively. Other global integrated firms like Total (TOT), YPF (YPF), and PetroChina (PTR) have been rated as “buy” by 50%, 83%, and 57% of analysts, respectively.

Why analysts have a positive opinion on Shell

Shell is strengthening its financials by reducing operating costs, optimizing 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 its financial performance, and produce returns at all points in an oil price cycle. Moreover, Shell’s integrated value chain is further expected to help the company grow in a competitive scenario.

In the first quarter, Shell has posted a good set of numbers. The company’s earnings rose, net debt reduced, and cash flows saw a surplus. Thus, it’s no surprise that many analysts have a positive opinion on Shell.

In the next article, we’ll look at Shell’s valuation ahead of earnings.