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Shell shares rise as Wolfe Research upgrades stock to ‘outperform’ Investing.com

Investing.com — Shares of Shell (BS: ) rose on Friday after Wolfe Research upgraded the energy giant’s stock to an “outperform” rating.

Analysts at Wolfe Research cited the opportunity presented by the recent decline in Shell’s share price, positioning it as an attractive entry point for investors.

Analysts expressed optimism about Shell’s upcoming strategy update scheduled for March 25, which they expect will outline new targets through 2030.

The upgrade is rooted in Shell’s revised approach under CEO Wael Sawan. Since taking the helm, Sawan has recalibrated the company’s strategic focus, balancing its investments between renewable energy sources and traditional oil and gas operations.

This two-pronged approach has resulted in reduced cash consumption and targeted cost savings of $2 billion to $3 billion by 2025.

Analysts at Wolfe Research predict that these efforts will help reshape Shell’s free cash flow prospects, providing the basis for improved dividend growth and sustainable shareholder returns.

Wolfe Research set a $80 price target per share on Shell, implying a 27.7% upside from its recent close of $62.65.

This estimate reflects long-term price assumptions of $70 per barrel and a weighted average cost of capital of around 8%.

Analysts argue that Shell’s dividend growth capacity—estimated at 4% annually—could further cement its position as a strong performer in the sector.

The note highlighted the importance of dividends in stimulating market recognition of value, especially in the oil and gas sector.

Wolfe Research noted that Shell’s current dividend policy already supports a higher valuation than the company’s recent trading levels, reinforcing the company’s view that a shift toward improved dividend payouts could catalyze renewed stock outperformance.

Shell’s recent poor performance, due to a sector-wide selloff and broader market gyrations, has left its shares undervalued relative to their potential, according to Wolfe Research.

Analysts see the upcoming strategic update as a key moment for Shell to address market concerns and potentially refocus its cash-back strategy, favoring dividends over share buybacks.





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