Barclays reiterates 'top pick' for Royal Dutch Shell, labels shares "attractive"

Barclays reiterated its choice of Royal Dutch Shell as its 'top pick' in the the European Integrated Oil and Refinancing space, labelling the 9%-plus dividend and buyback yield on which Shell shares were trading "attractive" and reiterating its 3,250.0p target price.

In a research report entitled "the best kept secret", Barclays pointed out the heightened scrutiny from investors and regulators on the outfit's ability to deliver a lower carbon energy system and welcome the company's decision to reposition its business units into core upstream, leading transitions and emerging power.

Nevertheless, the broker conceded investor pushback when it came to the oil major's pivot towards "leading transition" areas, especially as regards its downstream businesses.

That was critical because Shell was counting on the unit to deliver a 50-100% uplift in free cash flow between 2020 to 2025, from $6.0-7.0bn to $10.0-12.0bn.

"In turn this effectively represents 60% of the total FCF uplift and as such delivering on these targets will be critical to Shell's plan to return cash to shareholders," Barclays said.