HSBC Downgrades Shell (NYSE:SHEL) to Hold, Flags Rising Debt and Weaker Trading Outlook

Shell (NYSE:SHEL) is one of the best commodity stocks to buy, but even the strongest players face headwinds in shifting markets. On August 1, 2025, HSBC downgraded the energy giant from Buy to Hold, citing growing concerns over its financial trajectory. The bank’s analyst Kim Fustier warned that Shell’s net debt could climb from around $43 billion in Q2 to over $60 billion by 2027, driven by operating cash flows failing to cover dividends, capex, and lease obligations.

Adding to the bearish tone, HSBC believes Shell’s trading division, once a standout profit engine, is set to normalize, dragging down returns. This expected decline, paired with deeper losses in its chemicals segment, led the firm to trim Shell’s 2025–2027 earnings and cash flow forecasts by 4 to 5 percent.

While Shell currently trades at a premium to peers like TotalEnergies on EV/DACF and price-to-cash flow metrics, its lower yield and similar debt profile undermine that valuation gap. HSBC did nudge its price target slightly higher to $3,747, but the tone of the report made clear that the upside is limited and conditional.

Shell (NYSE:SHEL) is one of the world’s largest integrated energy companies, operating across oil, gas, chemicals, and renewables. It is headquartered in London and employs over 90,000 people in more than 70 countries.

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