Berenberg raises target price on Shell

Analysts at Berenberg raised their target price on energy giant Shell from 2,950.0p to 3,400.0p on Wednesday, stating the group was "still on the right track".

Berenberg noted that Shell reported "a strong set of Q1 results" on 2 May, demonstrating the progress that the company was making on its strategy under a new management team, with better operational performance, combined with a focus on cost and capital discipline, driving strong earnings and cash flow.

"Its integrated gas business delivered another strong quarter, helped by lower operating costs, higher volumes and solid trading results. Cash flow before working capital was $16.1bn, the highest since Q3 2022, enabling another $3.5bn buyback and a $2bn reduction in net debt alongside a $2.8bn working capital build," pointed out the German bank, which reiterated its 'buy' rating on the stock.

Berenberg stated that despite the strong performance so far this year, the valuation remains attractive, in its view, with a 12% free cash flow yield underpinning the anticipated 10% total cash return to shareholders, with the stock trading on 8.8x price-to-earnings ratio.

Reporting by Iain Gilbert at Sharecast.com