Shell PLC's (LSE:SHEL, NYSE:SHEL) fourth-quarter 2025 update was slightly below expectations, according to analysts at Deutsche Bank and RBC Capital Markets, who both point to a mix of operational stability offset by earnings and cash flow pressures.
Deutsche Bank described the update as “incrementally negative” with earnings and cash flow hit by deferred tax effects, higher depreciation and increased cash taxes. The bank lowered its quarterly earnings estimate by 11% and cash flow from operations by 6%, expecting consensus to adjust down by around 5% on earnings and 3% on cash flow.
RBC echoed a similar tone, saying the update was “disappointing” with several additional charges affecting earnings.
The Canadian bank cuts its adjusted net income estimate for the quarter from $3.76 billion to $3.32 billion, and lowered its underlying cash flow estimates from $9.78 billion to $7.45 billion.
The bank now sees Shell’s cash flow payout ratio rising to 57%, from 49% the prior quarter. Moreover, it said the focus is now on whether Shell will maintain its $3.5 billion quarterly buyback rate, though noted the company has been consistent on distributions.
RBC retains an ‘Outperform’ rating with a 3,600p price target, suggesting 40% upside.