Energy giant Shell could be a big winner going forward, according to Goldman Sachs. Analyst Michele Della Vigna upgraded the stock to buy from neutral and hiked his price target on the company's U.S.-listed shares to $85 from $74. That forecast implies upside of 40% from Friday's close. "In our view, Shell has the highest quality combination of assets in the sector, with a leading global LNG and marketing businesses and strong chemical presence," Della Vigna wrote Monday. "We see material upside to operational performance in both deepwater and [liquified natural gas] assets, while the company's strong balance sheet might allow it to veer towards the upper end of the sector's new 30-40% cash distribution range," he added. Goldman Sachs said that "ongoing capital discipline" has helped reposition Shell's upstream oil portfolio higher on the profitability cost curve, despite the firm's lower long-term oil price assumptions. Della Vigna added that Shell has its lowest oil break-even price in recent history, also falling below current spot and average prices among other big oil companies in the European Union. Shell's expected cash returns to shareholders in 2023 falls below that of its competitors. However, the analyst thinks Shell's returns can compete with other companies in the region. — CNBC's Michael Bloom contributed to this report.