Erste Group raised its recommendation on Shell Plc to Buy from Hold on Wednesday, citing the company’s refining operations as a key driver of outperformance.
The upgrade follows Shell’s second-quarter results, which reported revenue of $94.66 billion, exceeding the $86.80 billion forecast, though earnings per share came in at $1.76, below the $2.80 estimate. Operating cash flow surpassed $21 billion, while free cash flow reached approximately $17 billion. Net debt declined to about $42 billion, and the company reaffirmed its 2026 capital expenditure guidance of $24 billion to $26 billion, alongside a planned $3 billion share buyback program.
Analyst Hans Engel highlighted Shell’s disproportionate benefit from high refining margins on final products, including diesel, gasoline, and kerosene. The company’s refining capacity is currently operating at full capacity, supported by a strong distribution network. Engel noted that Shell’s integrated value chain has delivered sharper revenue and profit growth this year compared with pure-play oil producers.
Shell’s stock, trading at $90.47, carries a price-to-earnings ratio of 10.03 and a dividend yield of 3.43%. The shares have gained 27% year-to-date and hold a perfect Piotroski score of 9.
In trading activity, Shell and Equinor sold two WTI Midland crude oil cargoes to Total via the Platts window, with deliveries scheduled between August 24 and September 3 at differentials tied to dated Brent.
