Analyst ratings for Shell
Ten Wall Street analysts cover Royal Dutch Shell (RDS.A). Of these, eight analysts rate Shell stock as a “buy” or “strong buy.” The remaining two analysts rated Shell as a “hold.” Shell’s mean target price of $83 per share implies a 40% gain from the current level.
Shell’s peers ExxonMobil (XOM), Chevron (CVX), and BP (BP) have been rated as a “buy” by 26%, 79%, and 45% of analysts, respectively. Other global integrated firms like Total (TOT), YPF (YPF), Petrobras (PBR), and Suncor Energy (SU) have been rated as a “buy” by 80%, 79%, 43%, and 92% of analysts, respectively.
Why do analysts love Shell?
Shell has posted robust third-quarter numbers. In the quarter, the company’s earnings increased, net debt fell, and liquidity improved. Shell’s net debt reduced by $8 billion year-over-year in Q3 2018, strengthening its debt position. We’ll discuss more on debt in the next part. Shell’s cash flow from operations (or CFO) rose by 59% YoY to $12 billion in the third quarter. Shell had surplus CFO after meeting its necessary expenses like capital expenditure and dividends, a favorable scenario.
Shell’s better performance is the result of its strategy to employ four powerful levers: reducing costs, selling non-core assets, optimizing capex, and delivering new projects on time and within budget.
Overall, Shell’s financials are improving due to its robust strategy. The company plans to continue this strategy in the future. Thus, going forward, most analysts are likely to remain positive on the company due to its strengthening financials.