UBS lowered its rating for oil major Royal Dutch Shell from 'buy' to 'neutral' on Friday, citing an absence of near-term momentum.

"A 4Q miss versus UBSe and consensus and no near-term prospect of an improvement in the main drag on performance - the North American upstream business - prompt us to cut 2013/14E earnings per share by an average 10%, and to cut our recommendation to 'neutral'," the broker said.

Clean net income in the fourth quarter came in at $5.58bn, some 12% short of UBS's $6.4bn forecast.

"The miss was primarily in Upstream where the Americas business was once again loss-making, impacted by low natgas prices, low heavy oil realisations and significant depreciation charges reflecting heavy investment."

UBS highlighted that the company's strategic plan is unchanged, targeting $175-200bn of operating cash flow over the 2012-2015 period, but it's still "early days".

"The company acknowledges this cash delivery is back-end loaded and earnings will serve to magnify that further as a combination of low US natgas and heavy oil prices, high depreciation and heavy investment materially dampen North American upstream income."

The broker has left its target price at 2,300p.

Shares were down 1.07% at 2,217p by 09:56.

BC

Related share prices
Royal Dutch Shell 'A' (RDSA) share price
Royal Dutch Shell 'B' (RDSB) share price