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Shell Cash Flows May Limit Share Upside, BofAML Says; Prefers BP 2014-03-27 16:18:02.604 GMT
By Benjamin Dow March 27 (Bloomberg) -- Some of Shell’s recent disposals have indicated attractive valuations, BofAML says in note; warns against assuming that disposal target will be reached without any oper. cash flow (OCF) dilution. * BofAML re-initiates ratings for Shell (neutral, PT on A shares 2,260p), also BP (buy, 530p) * Says Shell may yet announce more writedowns, which may support returns (ROCE), possibly OCF, not necessarily FCF * Cites Australian downstream disposal as example of deal with good valuation while limiting OCF, earnings dilution * Sees BP’s OCF as most visible among global integrated peers; this drives div. growth covered by FCF * Broker says strong FCF coverage leads to “optionality” in lower gearing, increased shareholder returns * Subtracts 50p/share to discount remaining legal uncertainties from Macondo trial
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To contact the reporter on this story: Benjamin Dow in Moscow at +7-495-771-7735 or bdow2@bloomberg.net
To contact the editor responsible for this story: James Ludden at +44-20-7673-2645 or jludden@bloomberg.net