Shell PLC's (LSE:SHEL, NYSE:SHEL) upcoming capital markets day is now in full focus after fears of soft trading were largely mitigated with earnings on Thursday, analysts have said.
Despite missing on earnings, better underlying cash flow from operations spelled results that were not as bad as fears, RBC analysts said in a note.
“The market seemed to be relieved by only a small miss,” the bank said after shares ticked up in the wake of the update.
Shell had unveiled a near-50% drop in adjusted earnings to US$3.7 billion (£3.0 billion) year on year, as the likes of weaker oil prices and squeezed margins weighed.
Cash flow from operating activities of US$13.2 billion was 5% higher than a year earlier though, with a US$3.5 billion buyback being unveiled.
Citing a lack of movement in Shell’s valuation multiple despite operational improvement under chief executive Wael Sawan, RBC highlighted March 25’s capital markets day.
“For now, we think simply extending the track record and building more trust would be beneficial, but we wonder whether the company may consider more drastic actions.”
Citi analysts noted such action could come in the form of “a large reset around ambitions in the renewables space,” prompting lower capital expenditure ahead.
At 2,650p, Citi upped Shell’s share price target by 4%, as RBC reiterated 3,500p.
Shares climbed 2,682.5p on Friday.