Shell Downgraded by Morningstar

FTSE 100 oil giant has lost its economic moat and has had its fair value slashed because of uncertainty over the company's plans for the low-carbon transition

James Gard 23 June, 2021 | 12:24AM
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Shell logo at a petrol station

Oil giant Shell (RDSB) has been downgraded and stripped of its economic moat by Morningstar analysts, who blamed the ESG uncertainty overhanging the sector and lower expectations for oil prices over the next decade. The FTSE 100 company now has no economic moat and its fair value estimate has been lowered from £22 per share to £19.40 per share. This means the company has moved from being a 5-star to a 4-star stock, but that means it is still undervalued at around £14 per share currently.

The stock was the first of our new video series on undervalued UK stocks. Last year it cut its dividend for the first time since the second world war as oil prices plunged, and this had a big impact on UK income seekers. Since then the oil price has rebounded sharply as people get back in their cars again, and the company has proposed an increase to its dividend.

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James Gard  is content editor for