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UPDATE: Bank of America Reinstates Coverage on Royal Dutch Shell on Multiple Challenges Ahead

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In a report published Friday, Bank of America analyst Christopher Kuplent reinstated coverage on Royal Dutch Shell plc (NYSE: RDS-B) with a Neutral rating and $73.68 price target.

In the report, Bank of America noted, “We see RDS as one of the more challenged Global Supermajors within its peer group. We believe RDS falls short on visibility regarding the required recovery in OCF. Our forecasts suggest FCF is not sufficient to cover RDS's dividends for the foreseeable future: Our base case therefore assumes zero dividend growth beyond 2014, increasing gearing towards 20% instead. This is in contrast to our estimate for BP's decreasing gearing and >5% DPS CAGR. And yet, they both trade on similar ~5% dividend yields. We prefer BP (Buy, PO 530p).”

Royal Dutch Shell plc closed on Thursday at $76.78.

Posted-In: Bank of America Christopher KuplentAnalyst Color Initiation Analyst Ratings


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