Where Do Analyst Ratings for Shell Stand after Q4 Earnings?



Analyst ratings for Shell

In the previous part of this series, we looked at how Royal Dutch Shell’s (RDS.A) stock reacted to its Q4 2018 earnings. Now, we’ll examine analysts’ ratings for Shell after its earnings.

After its earnings, 11 Wall Street analysts were covering Shell. Of the total, nine analysts assigned a “buy” or “strong buy” rating, two analysts assigned a “hold” rating, and no one assigned a “sell” or “strong sell” rating on the stock. Shell’s mean target price of $78 per share implies a 27% gain from the current level.

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Will positive sentiment continue?

Shell improved its overall financial position in 2018. Shell’s earnings have grown, net debt has decreased, and liquidity has improved. Shell’s debt and liquidity position, which was unfavorable a few years back, now seems to be getting better. Shell’s net debt reduced by a whopping $14.5 billion to $51.4 billion in 2018. Further, Shell’s cash flow from operations (or CFO) rose by 49% to $53.0 billion in 2018. Shell had surplus CFO after meeting its vital expenses like capital expenditure and dividends in the year, which is a favorable scenario.

Shell’s better financials are the results of its strategy to reduce cost, optimize capex, sell non-core assets, and deliver new projects per schedule and within budget. The company plans to continue to work on this strategy in the future. Thus, going forward, most analysts are likely to remain positive on the stock due to its strengthening financials.

Analyst ratings for peers

BP (BP), ExxonMobil (XOM), and Chevron (CVX) have been rated as a “buy” by 55%, 32%, and 78% of analysts, respectively. Total (TOT), Suncor Energy (SU), and YPF (YPF), other global players, have been rated as a “buy” by 100%, 92%, and 79% of analysts, respectively.

In an upcoming part, we’ll look at Shell’s stock price forecast range for the next eight days.


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