Berenberg has reiterated its Buy rating on Shell PLC (LON:SHEL: LN) with a steadfast price target of £34.00.
The firm's endorsement comes as Shell continues to execute its new strategy effectively, aiming for a 10% annual improvement in underlying free cash flow (FCF) per share through 2025.
The company's share repurchase program, which is projected to account for approximately 6% of its market capitalization this year, has been a significant factor in its performance. This program has contributed to a 15% reduction in the share count over the past two years.
Shell's commitment to portfolio optimization, cost reductions, and operational enhancements has been a critical component of its strategy.
The recent suspension of operations at the Netherlands biofuels facility and the resultant impairment charge underscores the company's dedication to efficiency and prudent capital allocation.
The analyst from Berenberg highlighted that despite the challenges, such as the halting of the biofuels project, Shell's focus on efficiency is expected to lead to further improvements.
The firm anticipates that Shell will continue to make decisions that favor enhanced capital efficiency, which should, in turn, result in higher returns and cash generation for the company.
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