Analysts at Berenberg slightly raised their target price on oil and gas giant Shell from 2,350.0p to 2,375.0p on Monday, stating the firm was “on a roll”.
Berenberg noted that Shell had reported “a strong beat” for the fourth quarter of 2021 and that the firm had confirmed a 4% dividend increase and an $8.5bn buyback for 2022.
The German bank also highlighted that after “a stellar year for cash generation”, the outlook for 2022 was even better, particularly for Shell’s integrated gas business.
While Berenberg said the key will be delivering consistent production and operations so that the company can benefit from the strong environment for liquefied natural gas, it believes Shell will deliver its highest returns in a decade in 2022, while returning around 9% of the market cap to shareholders in cash.
“We continue to view the company as attractively valued at 8.7x current-year price-to-earnings, and raise our price target to €28.40/2,375.0p,” said the analysts, who also reiterated their ‘buy’ rating on the stock.
Analysts at Canaccord Genuity trimmed their target price for shares of Genel Energy from 195.0p to 185.0p on Monday ahead of what they termed an important two years as the oil explorer “refines or defines” its rationale.
The Canadian broker was referring to the outfit’s need to decide on its next steps, whether to expand into other regions, embark on mergers and acquisitions or, absent new investments, to “substantially” increase shareholder returns.
Compounding its quandary was initial production at its Sarta field that fell short of expectations and its recent loss of licenses for the large gas resources at Miran and Bina Bawi.
However, Canaccord said at a price of $75.0 per barrel, the outlook for the company’s free cash flow was positive, with Genel anticipating FCF of about $200.0m in fiscal year 2022, before dividends, up from an expected $86.0m in FY 2021.
On the other hand, Canaccord said it now excludes any residual value related to the possible retrieval of the Miran/Bina Bawi licences and Qara Dagh from our target price until it sees greater clarity on the firm’s next steps.
