Shell refined its earnings targets on Jan. 17 to almost a billion dollars below expectations, causing the company’s share price to initially fall by just over 3%. The market may have reacted badly to this shock from Shell, but Peter Garnry, head of equity strategy at Saxo Bank, sees the profit warning as no reason to panic.
Garnry said he believes that the share price is not reflecting the whole business and that Shell is not the only oil company coping with high refining costs.
Shell’s new CEO, Ben van Beurden, who started at the beginning of the year, was quoted as saying, “Our 2013 performance was not what I expect from Shell.”
The company also failed to meet earnings expectations during the third quarter of 2013, with overcapacity in Europe and Asia mainly being blamed.
Remaining positive on Shell’s stock, Garnry said he believes that high refining costs are only “hurting profits in the short term.”