RDSA.L Share News (RDSA)

(ShareCast News) - Morgan Stanley analysts upped their target price on shares of Royal Dutch Shell, hailing the "substantial improvement" in the oil major's free cash flows.That, analysts Martjin Rats, Haythem Rashed, Sasikanth Chilukuru and Philip Wrede said, meant Shell's was now 'fully covered' for the first time in four years.They hiked their target price on Shell's 'A' shares from 2,600p to 2,750p and reiterated their 'overweight' recommendation on the shares.Despite that, the shares' dividend yield, although it had compressed, remained "stubbornly high" at 6.8%.In April 2016, the yield hit 7.5% amid fears over the sustainability of the company's pay-out policy.Following discussions with investors, Morgan Stanley said Shell's still elevated yield reflected that the company had yet to deliver on lofty expectations for its free cash flows.Consensus projected $17bn of FCF over the next 12 months, but realised FCF over the past 12 months had been -$5.6bn.Secondly, at $78bn and 30% its net debt and gearing were "high", Morgan Stanley said, both on a historical basis and relative to its peers."The fact that Shell did not realise its $6-8bn disposal target in 2016 is keeping these concerns elevated. However, both will likely alleviate during 2017.""Realised disposals and assets currently being marketed add up to ~$14bn,approximately half the $30bn target. We believe Shell could achieve this half-way mark in 2H17, with the full $30bn to be reached during 2018."