Jefferies sets Flowco stock with a buy rating, $35 target

On Monday, Jefferies initiated coverage of Flowco Holdings (NYSE:FLOC) with a Buy rating and a price target of $35.00. Currently trading at $28.65, with a market capitalization of $630 million, InvestingPro analysis indicates the stock is trading above its Fair Value. The stock’s P/E ratio of 3.7x and EBITDA of $176 million for the last twelve months suggest strong fundamentals. Flowco Holdings, recognized for its role in production optimization, artificial lift, and methane abatement, operates across all major U.S. oil basins, with a strong presence in the Permian. The company is known for serving customers through various stages of a well’s lifecycle, offering solutions that are increasingly preferred in the market due to their cost-effectiveness. With a robust gross profit margin of 50.6% and a current ratio of 3.4x, the company maintains a strong financial position.

Flowco’s product line includes high-pressure gas lift (HPGL), conventional gas lift, and plunger lift solutions, which are not only growing in demand but also provide high margins. The firm is also a leader in vapor recovery unit (VRU) technology, which allows producers to reduce emissions while still achieving profitable returns. This technology is particularly significant as the industry faces increasing pressure to mitigate environmental impact.

The company’s business model, which emphasizes operational expenditure over the more cyclical drilling and completion capital expenditure, is a key factor in its stability and potential for growth. InvestingPro subscribers can access additional insights, including 6 more ProTips and detailed financial metrics that provide a comprehensive view of Flowco’s market position and growth potential. This approach is complemented by Flowco’s strategy of renting out systems rather than selling them outright, a move that has been expanding steadily. In 2026, rentals are projected to account for approximately 51% of revenue, up from about 43% in 2023.

Jefferies analysts highlight Flowco’s unique position for growth, citing an in-house and domestic manufacturing capability that adds to the company’s strengths. Looking ahead, Jefferies 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 projections underscore a positive outlook for Flowco Holdings as it continues to innovate and lead in its sector.

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