Proactive Investors - Shell PLC (LON:SHEL) has the strongest balance sheet of all the European integrated oil majors and warrants a ‘buy’ recommendation, that’s according to analysts at Berenberg, with a price target of £28.50 which sees 100p of upside from the current market price of around £27.50.
“Shell released its second quarter update note on 4 July, pointing to a weaker quarter (as expected), which might be partially offset by working capital inflows,” Berenberg analyst Henry Tarr said in a note.
Tarr added: “We remain positive about Shell after the company’s recent strategy day, which highlighted the strong position of the company, in our view, and the potential for significant shareholder returns over time.
“Shell moved away from longer-term volume targets across a range of different metrics and instead is focused on cost discipline, moving to targeting ROCE across its businesses, along with a near-term improvement in underlying FCF/share of 10% per year to 2025.
“Shell has the lowest level of gearing of the peer group, which should enable it to channel a greater proportion of the FCF back to shareholders.”