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Investing.com - BofA Securities downgraded Flowserve Corp. (NYSE:FLS) from Buy to Neutral on Friday, while raising its price target to $73.00 from $60.00. The stock currently trades at around $68, after posting strong returns of over 31% in the past six months.
The downgrade comes as BofA believes the near-term nuclear upside is already priced into Flowserve shares following a recent re-rating. The firm expects weakness in Flowserve’s core end markets, including oil & gas and chemicals, to likely extend into 2026.
BofA Securities notes that while margin expansion remains strong and will likely drive above-peer EPS growth in 2026, these incrementals are largely priced into the current valuation. The firm’s 2026 EPS estimate sits approximately 3% below consensus. According to InvestingPro data, Flowserve trades at a P/E ratio of 19.8 but has a remarkably low PEG ratio of 0.28, suggesting it’s trading at a low P/E relative to near-term earnings growth.
The new price target of $73 is based on 10x 2027E EV/EBITDA, representing a discount to peers trading at 16x 2025E. BofA considers this valuation fair given Flowserve’s lower margins compared to industry peers.
Despite the downgrade, BofA acknowledges potential upside risk to bookings from lumpy projects, while margin expansion should partially offset weakness in core markets.
In other recent news, Flowserve Corporation reported its third-quarter 2025 earnings, surpassing analysts’ expectations with an adjusted earnings per share of $0.90, compared to the forecasted $0.80. Revenue met expectations at $1.21 billion, signaling a strong financial performance. The company also reported bookings exceeding $1.2 billion, indicating potential growth in orders. Stifel raised its price target for Flowserve to $84 from $66, maintaining a Buy rating, following the company’s revenue growth of 4% and earnings per share 12% above their estimates. TD Cowen also raised its price target on Flowserve to $80 from $75, citing improved execution across the company and strong third-quarter performance. Both firms highlighted Flowserve’s progress in its Flow Control Division and 80-20/simplification initiatives. These developments reflect strong investor confidence and an optimistic outlook for Flowserve’s future performance.
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