Shares in Shell PLC edged lower on Monday after Mizuho Securities initiated coverage of the energy giant with a neutral rating, pointing to headwinds from weakening refining margins and subdued gas trading performance. The stock slipped 0.6% to 2,845p in afternoon trading, trimming gains from earlier in the session as the FTSE 100 index hovered around 8,210 points, down 0.2% on the day.
Mizuho’s analysts said in a note to clients that while Shell’s integrated model and strong balance sheet provide resilience, near-term earnings face pressure from lower refining margins globally and a softer outlook for gas and LNG trading. The bank set a price target of 2,900p, implying limited upside from current levels. Shell’s refining margins have narrowed in recent months as new capacity comes online and demand growth slows, particularly in Europe and Asia.
The neutral rating places Mizuho in line with a consensus that has grown more cautious on the oil and gas sector. Shell’s shares have fallen roughly 4% year-to-date, underperforming the FTSE 100’s modest gain of about 2% over the same period. Rival BP also faced similar margin concerns earlier this year, though its shares have held up slightly better, down around 1.5% in 2026. Analysts at Mizuho noted that Shell’s capital returns programme, including buybacks and dividends, remains attractive but may be less compelling if earnings disappoint.
For UK investors and pension holders, Shell remains a heavyweight in many portfolios, comprising around 8% of the FTSE 100 index. The neutral stance suggests limited near-term catalysts for the stock, though the dividend yield of approximately 3.8% continues to provide income. Sector analysts at AJ Bell commented that the cautious view reflects broader uncertainty in global energy markets, with oil prices stabilising around $78 per barrel but refining spreads under pressure.
The energy sector as a whole has been a mixed bag for UK investors this year, with renewable energy stocks gaining on policy support while traditional oil and gas names face margin compression. Shell’s next quarterly results are due in early August, and investors will be watching closely for updates on trading conditions and capital allocation. The company has not commented on the Mizuho note.