Where could Shell’s share price go in the next 12 months? Here’s what the experts think

I A shell (LSE:SHEL) share price has been on a slow downward trend over the past six months, down more than 10%. It seems that investors are becoming increasingly worried about the drop in oil prices and the announcements from some of the titans of the industry. BP of weak interest. In fact, BP recently announced a possible reduction in its planned share buyback program to reallocate cash towards debt reduction.

With that in mind, investing in Shell doesn’t sound like a good idea right now. However digging into its latest results, it seems to paint a very different picture. In fact, although its most recent quarterly revenue was down 3% year-over-year, that’s 12% ahead of analysts’ expectations.

After that, dividends were retained, and another $3.5bn of share buybacks were announced to be completed before the end of 2024. At the same time, Shell’s gearing fell from 17% to 15.7%, thanks to a $3.1bn reduction in debt. it is the background to the continued generation of free income.

Needless to say, pairing better-than-expected profits with strong balance sheet news for shareholders. But given this performance, what do experts predict for Shell’s share price over the next 12 months?

Prediction

The latest analyst forecasts for Shell look very encouraging. While not everyone is convinced, 14 out of 20 institutional analysts have the oil and gas giant in a Buy or Outperform rating. And when you look at 12-month share price forecasts, it’s not hard to see why.

An expected return of around 160% would be great. But it also sounds absurd, especially considering the double-digit drop in oil prices by 2025. However, although this is the opinion of one analyst, Trump’s recent victory in the US election bodes well for Shell. After all, Trump has promised a massive increase in US oil and gas production, which could create a host of new growth opportunities.

Furthermore, from a valuation perspective, Shell shares are currently cheap compared to its peers with a price-to-earnings (P/E) ratio of 13.9 compared to BP’s 29. And it’s no secret that buying cheap stocks is a winning strategy. for maximum benefits.

However, it is important to remember that as a commodity-driven business, Shell does not have pricing power. And if predictions of falling oil prices prove true, the resulting drop in profits could push up Shell’s P/E ratio.

Time to shop?

As tempting as the growth opportunity is, I’m in no rush to start buying Shell shares right now. There is a lot of external uncertainty that could have a big impact on oil prices, especially regarding the ongoing conflicts in the Middle East.

Instead, I dedicate my money to other promising investment opportunities.