Shell: Limited Upside and Constrained Capital Returns Drive Continued Hold vs. Preference for TotalEnergies

Bank of America Securities analyst Christopher Kuplent reiterated a Hold rating on Shell (UK) today and set a price target of p2,900.00.

Christopher Kuplent has given his Hold rating due to a combination of factors related to Shell’s recent performance and limited upside potential. He notes that the latest quarterly earnings came in below market expectations, even after significant consensus downgrades earlier in the year, which undermines confidence in near‑term earnings momentum. On valuation, his modest reduction in 2026 earnings estimates and the corresponding cut to the price objective leave only a small potential gain from the current share price, which he does not view as compelling enough to justify a more positive stance.

Christopher Kuplent’s rating is based on the view that Shell’s capital returns policy, while generous on paper, is constrained by the need to preserve its balance sheet strength and maintain flexibility for future acquisitions. He highlights that buybacks remain flat even as leverage edges higher, suggesting management is cautious about fully exploiting its financial capacity for shareholder distributions. In his assessment, the stock’s organic free cash flow yield is not being translated into proportionate, sustainable shareholder rewards, which limits re‑rating potential. Consequently, he maintains a Neutral stance and continues to regard TotalEnergies as the more attractive Big Oil name, given its better positioning to handle a prolonged period of weaker oil prices and its anticipated free cash flow improvement from its power business.

Kuplent covers the Energy sector, focusing on stocks such as TotalEnergies SE, BP, and Shell (UK). According to TipRanks, Kuplent has an average return of -0.5% and a 56.79% success rate on recommended stocks.

In another report released yesterday, UBS also maintained a Hold rating on the stock with a £28.50 price target.