Berenberg marks up Shell target price ahead of Investor Day

Analysts at Berenberg bumped up their target price for shares of Royal Dutch Shell from 3,000p to 3,100p, pointing out to clients the oil major's upwardly revised guidance for payouts and telling them that shares could recover from their recent underperformance if "momentum can be maintained".

They also noted the outfit's "solid" cash flow in a "challenging" quarter in terms of the macroeconomic backdrop, even if gearing did tick higher.

And the strength seen in its integrated gas unit bode well for the rest of the year, not withstanding weak spot LNG prices in the first quarter.

Management had also upped the pace of share buybacks, from $2.5bn per quarter to $2.75bn "demonstrating the commitment to meeting the target of USD25bn in buybacks over the 2018-20 period."

And now, the German broker said: "with gearing under control and strong FCF generation, investors are looking to the investor day in June for an update on the shareholder returns beyond 2020."

The exact date of the Investor Day had yet to be announced and Shell deferred any comment regarding the potential timing on the day of its results.

On the back of lower depreciation and amortisation together with higher earnings assumptions, mainly for Integrated Gas and Refining, the broker marked up its estimates for Shell's earnings per share in 2019 and 2020 by 10% and 4%.

"Following recent underperformance, this strong set of results may lead investors to revisit the story over the coming months, with interest focusing around the investor day scheduled for June."

Berenberg's recommendation for Shell's shares was kept at 'buy'.