Broker tips: Shell, Cairn Energy, Wolseley

(ShareCast News) - Investors need not be overly-concerned about the risks to Royal Dutch Shell's dividend, although the likelihood of a projected $25bn share buyback over four years might be a wholly different question, analysts at SocGen said.At its 7 June analysts meeting, the company would need to adress worries about its capital spending budget, its asset disposal programme and the sustainability of its dividend, analysts Irene Himona, Mehdi Ennebati, Yoann Charenton said in an extract from a research report sent to clients on the day before.The fact that in 'cash-out' terms the oil major´s capital expenditure was already at between $25 to $28bn, as oppossed to headline budgeted capital investment of $30bn, meant the company´s guidance was already in-line with expectations, the analysts said.Nonetheless, they believed markets were right to question Shell´s timeline of three years to complete its targetted $30bn in asset disposals.As regards the dividend, if necessary Shell could opt to maintain its scrip dividend beyond next year and delay its $25bn four-year share buyback programme, they said.Combined, those two measures would save the company $10bn a year in cash outflow - equivalent to a $20/barrel higher oil price, so closer to $70 per barrel - which in their opinion was "sufficient" for Shell to manage the balance sheet.Ahead of the meeting with analysts, SocGen boosted its target price on the shares from 1,660p to 1,900p and reiterated its 'buy' recommendation. RBC Capital Markets downgraded Cairn Energy to 'sector perform' from 'outperform' and cut the price target to 250p from 260p until 2017 drilling plans are confirmed.The Canadian bank said drilling success at the SNE field offshore Senegal has provided a welcome exception to recent drilling disappointments across the sector.RBC said the results demonstrated unequivocally that SNE has the potential to be a major oil field with reservoirs capable of delivering commercial flow rates.However, with limited news flow until drilling restarts in 2017, there is the potential for the stock to drift compared to leveraged peers, particularly in an improving oil price environment.In the medium term, RBC reckons Cairn remains well placed to become the "go to" UK main list E&P stock given a strong balance sheet, production base and stated strategy to return value created by the drill bit to shareholders."However, establishing this, more fully formed, business will require time and production start-up from the Catcher (Cairn 20%, Premier Oil operated) and Kraken (Cairn 29.5%, EnQuest operated) fields H2/17," it said. JPMorgan Cazenove downgraded Wolseley to 'neutral' from 'overweight' and cut the price target to 4,100p from 4,300p on valuation grounds."Prior to Q3, Wolseley had outperformed by 10% year to date. Despite the fact the stock was approaching what we viewed as fair value, it was our expectation that outperformance could continue, driven by an inflection in LFLs at Q3 and positive US news flow," the bank said,However, it sad slower current growth reported last week has promoted it to cut its full-year 2017 earnings per share estimates by 2%.JPM said that while the stock is down 8% in the last three days, there is still only 9% upside to its new target price."Given that we do not view the valuation as particularly compelling and we struggle to think of near-term positive catalysts, we are downgrading."It noted that the company is due to report full-year results on 27 Sept and said that barring a sharp improvement in commodity pricing or industrial data, there are unlikely to be any positive catalysts between now and then.