Shell stock could rally another 40% from here: Goldman Sachs

It’s still not too late to build a position in Shell PLC (LON: SHEL) even though it’s already returned nearly 35% since late September, says Michele Della Vigna – Analyst at Goldman Sachs.

Shell stock could climb further to $85

In a note this morning, Della Vigna recommended buying the London-headquartered firm and said it had upside to $85. That price objective suggests a 40% premium on the current price.

The Goldman Sachs analyst is bullish on Shell stock primarily for its versatile set of assets. His research note reads:

In our view, Shell PLC has the highest quality combination of assets in the sector, with a leading global LNG and marketing businesses and strong chemical presence.

Earlier this month, the oil and gas behemoth said its profit more than doubled to a record $40 billion in 2022.

Why else is he bullish on Shell stock

Della Vigna also likes the British multinational for its ongoing capital discipline that he says will benefit its upstream business in terms of profitability.

Other reasons cited for the constructive view include the company’s oil break-even price that’s currently at its lowest in recent history. The research note adds:

We see material upside to operational performance in both deepwater and liquified natural gas assets, while strong balance sheet might allow it to veer towards the upper end of the sector’s 30-40% cash distribution range.

Shell stock currently pays a dividend yield of just over 4.0% which makes up for another reason to own shares.