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Investing.com - UBS downgraded Shell PLC (LON:SHEL) from Buy to Neutral on Wednesday, while lowering its price target to GBP30.00 from GBP32.00, citing valuation concerns after the stock’s recent performance.
Shell shares have risen 12% this year, driven by a series of cash flow beats that were helped by lower-than-expected operating costs, according to UBS.
The investment bank continues to view Shell as having "an important role to play in any energy portfolio" due to its strong financial position and hard-to-replicate businesses in Mobility and Integrated Gas.
However, UBS noted that after the recent price run, Shell shares "no longer screen as cheap on multiples," making it harder to justify the current valuation given the medium-term challenges the company faces.
These challenges include resource replenishment issues and more limited top-line growth prospects, factors that contributed to UBS’s decision to lower its rating on the energy giant.
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