Deutsche Bank upgrades Shell to 'buy'

Deutsche Bank has lifted its recommendation on Royal Dutch Shell from ‘hold’ to ‘buy’, saying that the risk/reward balance is “now firmly in our favour” ahead of the impending BG Group takeover.

The bank highlighted a number of key reasons for owning Shell’s stock, such as its sustainable dividend, substantial restructuring possibilities following the BG transaction and management’s desire to reshape Shell's ‘legacy’.

All of these factors are supported by the stock’s 6.3% dividend yield, it said.

“The shares now […] trade at a level from which we see limited relative or, indeed, absolute downside,” Deutsche Bank said.

The bank maintained a 2,425p target price for the stock, which was up 1.8% at 1,888.5p on Wednesday morning.