Evercore ISI sets Flowco stock outperform with $35 target

On Monday, Evercore ISI began coverage on Flowco Holdings (NYSE:FLOC), assigning the stock an Outperform rating and setting a price target of $35.00. Currently trading at $28.65, near its 52-week high of $30.50, Flowco Holdings is recognized as a unique small to mid-cap (SMID-cap) energy growth company with a focus on production optimization and methane abatement solutions. InvestingPro analysis indicates the stock is slightly overvalued at current levels, with additional insights available through their comprehensive financial analysis tools.

The company, which is based in the United States, specializes in production optimization, artificial lift, and methane abatement solutions. Flowco emerged from the combination of three sponsor-backed entities and swiftly transitioned to the public equity markets. Unlike other oilfield service industries that are affected by the fluctuating costs of drilling and completion capital expenditures, Flowco’s cash flows benefit from the more consistent operational expenditure of production.

Flowco’s offerings are particularly relevant to the production phase of wells, which can span 20-25 years, representing the most extended part of a well’s lifecycle. With North American Exploration and Production (E&P) companies maintaining disciplined capital allocation and focusing on maintenance, there is an increased demand for production optimization. This demand contributes to a total addressable market (TAM) that is expanding quicker than most other oilfield service (OFS) product lines.

The company stands out in the market, as there are few pure-play options for investors interested in these specific themes, with competitors’ solutions either being private or part of larger OFS entities. Flowco benefits from favorable rental economics, including rapid paybacks, and is expected to experience a positive shift in its product mix as it increases its rental exposure in gas lift and Vapor Recovery Units (VRUs).

Following an upsized Initial Public Offering (IPO), Flowco used the proceeds to reduce its revolving credit facility, resulting in a net debt to EBITDA ratio of less than 1x. The company maintains robust financial health with a current ratio of 3.43 and impressive gross margins of 50.55%. According to InvestingPro data, the company generated $70.36 million in levered free cash flow over the last twelve months, positioning it well for potential capital returns to shareholders and inorganic growth opportunities. With an attractive P/E ratio of 3.69 and an overall financial health score rated as "GOOD" by InvestingPro, the company demonstrates solid fundamental strength.

The Outperform rating and $35 price target from Evercore ISI are based on a 9.0x multiple on the firm’s 2026 EBITDA estimate. This positive outlook reflects Flowco’s strategic market position and its financial stability as it enters the public market. InvestingPro subscribers can access additional valuable insights, including 6 more ProTips, detailed financial metrics, and comprehensive valuation analysis to make more informed investment decisions.

In other recent news, Flowco Holdings has been the subject of several analyst coverage initiations. JPMorgan started Flowco stock with an Overweight rating and a target of $32, citing the company’s high-pressure gas lift (HPGL) systems and vapor recovery units (VRUs) as key growth drivers. Market research firm Rystad estimates that the market for HPGL could nearly double to $2.3 billion by 2030, further bolstering Flowco’s growth prospects.

Similarly, Piper Sandler initiated coverage on Flowco with an Overweight rating and a $34 target, highlighting the company’s strategic focus on technology and potential for high margins. Flowco’s management projects significant revenue increase, forecasting double-digit growth in 2025 and 2026.

BMO Capital Markets also initiated coverage on Flowco, setting a target of $33 and highlighting the company’s distinctive technology and market leadership in the artificial lift and methane abatement sectors. The firm expects Flowco’s high EBITDA margins to contribute to robust free cash flow and solid corporate returns.

Lastly, Jefferies initiated coverage of Flowco with a Buy rating and a $35 target, citing the company’s in-house and domestic manufacturing capability as a strength. The firm projects 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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