BMO Capital sets $33 target on Flowco stock, cites market leadership

On Monday, BMO Capital Markets initiated coverage on Flowco Holdings (NYSE:FLOC) with an Outperform rating and a price target of $33.00, representing a potential upside from the current price of $28.65. The firm highlighted Flowco’s distinctive technology and its commanding presence in the artificial lift and methane abatement sectors as the primary reasons for the positive outlook. According to InvestingPro data, the stock is currently trading near its 52-week high of $30.50, with technical indicators suggesting overbought conditions.

According to BMO Capital Markets, Flowco’s leading role in the high-pressure gas lift (HPGL) and vapor recovery units is anticipated to fuel double-digit revenue growth for the company through 2026. The analysts also pointed out that Flowco’s EBITDA margins stand higher than those of its oilfield services (OFS) peers, which is expected to contribute to robust free cash flow (FCF) and solid corporate returns. InvestingPro data reveals impressive financial metrics, including an EBITDA of $175.7 million and a strong gross profit margin of 50.55%.

The firm’s coverage comes at a time when Flowco’s industry-specific advancements have positioned it favorably within the market. The company’s technology in HPGL and vapor recovery units is seen as a key driver for its future revenue increases.

Flowco’s financial health was also a subject of note, as BMO Capital Markets underscored the company’s higher-than-average EBITDA margins. This financial metric is often used to assess a company’s operating profitability before non-operating expenses such as interest and taxes. The analyst’s expectation of strong free cash flow suggests confidence in Flowco’s ability to generate cash after accounting for cash outflows to support operations and maintain its capital assets.

BMO Capital Markets’ endorsement with a $33 price target reflects a belief in the company’s potential for growth and profitability. Flowco’s stock rating at Outperform indicates that the firm expects the company to perform better than the average of the market or its sector in the foreseeable future. The company maintains an overall "GOOD" financial health score according to InvestingPro’s comprehensive analysis, which considers multiple financial metrics and market indicators.

In other recent news, Flowco Holdings has been the focus of an analysis by Jefferies, which initiated coverage of the company with a Buy rating and a price target of $35.00. Jefferies analysts highlighted Flowco’s unique position for growth, citing its operational expenditure-focused business model and in-house and domestic manufacturing capability as key strengths.

Flowco’s strategy of renting out systems rather than selling them outright has been steadily expanding, with projections indicating rentals will account for approximately 51% of revenue in 2026, up from about 43% in 2023. The company’s high-pressure gas lift, conventional gas lift, and plunger lift solutions are not only growing in demand but also provide high margins.

Flowco is also recognized as a leader in vapor recovery unit technology, contributing to producers’ efforts to reduce emissions while still achieving profitable returns. Looking ahead, Jefferies foresees a compound annual growth rate (CAGR) of over 12% in revenue from 2024 to 2026, along with an EBITDA margin expansion of more than 400 basis points. These recent developments underscore a positive outlook for Flowco Holdings as it continues to innovate and lead in its sector.

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