Morgan Stanley on Royal Dutch Shell

In a research note released Wednesday, Morgan Stanley analyst Martijn Rats Upgraded Royal Dutch Shell

with a upgrade to an Overweight rating from Equal-weight. The analyst stated that Shell has “lagged” behind its peers but there is “evidence” that it is pointing towards positive change. The analyst continued by saying there are reasons that have pointed to positive change. Shell disposing of about 11 billion year-to-date, the cancellation of the scrip dividend program, and the United States pipeline infrastructure spin-off via an MLP. According to the analyst these factors, “ends credibility to Shell's strategy, focused on enhancing capital efficiency.” In regards to Shell's operating cash flow, the analyst believes that it could go from $37.5 billion in 2013 to a staggering $49 billion in 2016. In addition, according to the analyst, there are downside risks to capex.