Berenberg raises target price on Shell

Berenberg said Shell had delivered "a strong set" of fourth-quarter results on 2 February, driven by an "exceptional" integrated gas result, and distributed $26.0bn to shareholders in total in 2022, including $18.4bn in buybacks.

"While commodity prices are lower, we expect the company to be able to at least maintain a quarterly run rate of $4.0bn of buybacks through 2023 on top of the $7.5bn dividend," said the analysts.

The German bank noted that this would represent a payout ratio "well above the 20-30% range indicated", as was also the case in 2022, but thinks that this remains "comfortably achievable" given gearing now below 20% and continued strong capital discipline - enabling another year of double-digit cash returns to shareholders.

"Better operational performance in the integrated bas business could also help delivery in 2023," concluded Berenberg, which also reiterated its 'buy' rating on the stock.

Reporting by Iain Gilbert at Sharecast.com