Friday 29 Mar 2024
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KUALA LUMPUR (Nov 8): Goldman Sachs has downgraded Shell over what it views as overvaluation compared to its supermajor peers.

In a report on Monday (Nov 7), energy portal Oilprice.com said the European Union’s big oil sector, SXEP, has generated what Goldman Sachs referred to as a “strong” free cash flow of US$44.8 billion in the most recent quarter, yet Shell’s “outperformance” has resulted in “a relatively expensive valuation vs peers”.

It said that in a research report, Goldman Sachs downgraded Shell from “buy” to “neutral”, citing “above-average” valuation compared to competitors.

Goldman Sachs’ Michele Della Vigna’s new 12-month price target for Shell is now 38 euros, down from 40 euros.

Goldman Sachs estimates that shareholders of Shell will see 8.7% in total returns in dividends and buy-backs this year.

Compared to Shell’s peers, that number is less impressive when the average is 11.6%.

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