The energy transition is set to be a “megatrend of our generation” and the incumbent majors are well positioned for it, that’s according to Credit Suisse which today took a bullish view on Shell PLC (LSE:SHEL, NYSE:SHEL).
Credit Suisse analyst Amy Wong, in a note, said that ‘big energy’ is part of the climate solution, but there’s pressure on them to accelerate towards renewables.
Modelling the reduction of carbon emissions the Swiss bank said the four companies that it is following in the sector are estimated to reduce carbon dioxide intensity by an average of 18% by 2030 – which would be double the decline that ‘the world is currently tracking’.
At the same time, Wong said Credit Suisse estimates Europe’s integrated energy companies can offer an attractive free cash flow yield between 13% and 18% for 2022/23, on average, which the bank expects will enable them to fund energy transition plans.
Credit Suisse is positive on integrated energy, whilst, stock-by-stock it rates Shell as an ‘outperform’ with a 3,000p price target, describing the Anglo-Dutch as its ‘top pick’.
BP PLC (LSE:BP.) is, meanwhile, rated at ‘neutral’ with Wong noting that it had a high-quality hydrocarbons portfolio but near-term targets to grow through its ‘customers and mobility’ businesses may leave it exposed to scaling back its targets.
Elsewhere, Norway’s Equinor is given a ‘neutral’ rating and France’s TotalEnergies was rated as ‘outperform’.