Credit Suisse boosts 'Blue Sky' target price on meaner, leaner, fitter Shell

A "meaner, leaner and fitter" Royal Dutch Shell may emerge as soon as the outfit's second quarter results, with positive implications for its dividend, said analysts at Credit Suisse as they added the shares to their European Focus List.

Credit Suisse had an 'outperform' recommendation and 2,500 target price on the stock.

However, the analysts revised their 'Blue Sky" scenario target price from 2,910p to 3,065.23p on the assumption of further efficiency gains (the target under its Grey Sky scenario was kept at 2,040p).

Greater capital and operating efficiency could see the firm's break-even price of oil drop by about $10 to $40.

According to the analysts, Shell's chief might use the company's next financials, due on 27 July, to comment more positively on the outlook following the take-over of BG Group.

"Generally, this should reassure investors against what is proving to be a more challenging macro environment. For now, we treat this as a realistic blue sky scenario for RDS," the Swiss broker said.

That acquistion was a transformational event, positioning Shell lower down the production cost curve, with capital intensity falling and strategic focus rising - allowing it to de-risk its dividend.

Royal Dutch Shell's deep-water portfolio was industry leading and its "vast" resource base provided duration, according to the analysts.

"Slowly but surely, its shale portfolio was also emerging" and the downstream operations were highly profitable with upside potential.