RBC has nudged down its third-quarter profit forecast for Shell PLC (LSE:SHEL, NYSE:SHEL) after the energy major’s trading update, while simultaneously lifting its cash flow estimate, leaving a mixed but broadly constructive picture for the stock.
The broker, which rates Shell sector perform with a 4,000 pence target, cut its adjusted net income estimate for the quarter from $12.0 billion to $11.5 billion, though that still sits well above the $9.5 billion consensus.
Its underlying cash flow from operations forecast, excluding working capital movements and before interest, edged up from $19.2 billion to $19.5 billion.
The earnings reduction was driven by cuts across chemicals, integrated gas and marketing.
Chemicals took the heaviest hit, with RBC’s divisional estimate falling from $576 million to $81 million, while integrated gas came down from $3.6 billion to $3.3 billion and marketing slipped from $1.4 billion to $1.2 billion.
Upstream and products moved the other way, with upstream lifted from $3.3 billion to $3.5 billion and products from $3.8 billion to $3.9 billion.
RBC also highlighted an $18-a-barrel quarterly improvement in downstream margins, which came in ahead of expectations, and suggested Shell’s global shipping fleet gives it some insulation from freight cost pressures hitting peers.
On shareholder returns, RBC forecasts $3.5 billion in buybacks for the quarter but expects the rolling twelve-month cash flow payout ratio to ease to 40% from 44%, with any increase in distributions before 2027 likely to be modest.
Source: www.proactiveinvestors.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
