Shell Reports Strong Q3: Analysts Highlight Robust Buybacks Amid Market Challenges

Shell PLC SHEL shares are trading relatively flat on Friday.

Yesterday, the company reported revenue of $71.09 billion, beating the consensus of $61.34 billion. Total production at Integrated Gas fell 4% quarter over quarter (Q/Q) to 941 kboe/d, and Upstream rose 2% Q/Q at 1,811 kboe/d. 

RBC Capital Markets analyst Biraj Borkhataria reiterated the Outperform rating on Shell, with a price forecast of 3,500 pence.

The analyst highlighted that the earnings beat was notable for being broad-based rather than reliant on a single division.

Borkhataria projects management to look through softer quarters and maintain buybacks at $3.5 billion per quarter through next year.

According to the analyst, strong performance in the LNG division and resilient upstream earnings contributed to the positive results. Additionally, net debt (excluding leases) has fallen to just under $9 billion, the lowest level in over a decade.

Also Read: Shell’s Solid Q3 Performance: Strong Revenue, $3.5 Billion Buyback, And Refined Capex Guidance

They also mentioned that positive commentary on shareholder returns supports the stock, and Shell’s strong balance sheet offers flexibility in a potential downturn.

This positions the company to maintain share buybacks even in a weaker macro environment, and the analyst anticipates that the contrast with its peers will become more apparent by 2025.

Scotiabank Global Equity Research analyst Paul Y. Cheng reiterated the Outperform rating on Shell, with a price forecast of $80.

The earnings beat was broad-based, with Shell exceeding consensus estimates in all key segments, including Upstream, Integrated Gas, Marketing, and Chemicals & Products.

The only exception was the smaller Renewables and Energy Solutions division, which slightly fell short of the market’s expectations.

The analyst noted that Shell repurchased $3.5 billion in shares during the third quarter, meeting expectations.

Cheng also indicated that the company is likely to maintain its current buyback pace despite a less favorable outlook for commodity prices.

Price Action: SHEL shares are trading lower by 0.06% to $67.51 at last check Friday.

Image by siam.pukkato via Shutterstock

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