Shell one of the ‘most resilient’ oil companies

According to prominent city brokers, oil firm Royal Dutch Shell, which makes a number of oil-based products like Shell Tonna S3 M 68, is one of the most resilient oil companies in the world at the present time.

The company was upgraded on 24th August by Jefferies Group, which set Shell’s new target price at 2150p – around 30% higher than the current price – while making the comment that the company is a ‘buy’.

Market analyst Jason Gammel was slightly more conservative about the global oil company and the price it is paying to acquire BG Group, but even he upgraded the company from ‘hold’ to ‘buy’ because he expects it to be amongst the most resilient corporations in the oil sector in the coming months, due to the fact that Shell has the potential to grow and achieve significant additional value through share repurchases, divestitures and further savings in costs.

Speaking about the upgrade, he said:

“We expect the combined entity to have amongst the most resilient cash cycles within the sector at a wide range of oil prices.”

Jefferies Group admitted that they may have been premature with the upgrade on an absolute basis and that oil is still vastly oversupplied, which could cause prices to weaken further, but they are nevertheless confident that Shell will do well in the coming months and that a recovery of oil prices in this time frame will lead to an ‘outperformance’ by Royal Dutch Shell.