Raymond James initiates QXO stock with Outperform rating on acquisition strategy
Investing.com - Wells Fargo initiated coverage on Archrock (NYSE:AROC) with an Overweight rating and a $30.00 price target on Wednesday. According to InvestingPro data, analysts maintain a strong bullish consensus on the stock, with price targets ranging from $30 to $32, suggesting potential upside. The company has demonstrated robust performance with a 32.5% return over the past year.
The firm views Archrock as "A Play On US Nat Gas Supply Growth," noting the company is positioned to benefit from growing U.S. gas supply, which Wells Fargo forecasts will increase at a 5% CAGR through 2031, driven by LNG demand, rising AI datacenter power needs, and manufacturing onshoring. The company’s strong positioning is reflected in its impressive 28.2% revenue growth and consistent dividend payments, maintaining distributions for 12 consecutive years with a current yield of 3.4%.
Wells Fargo projects Archrock will grow its contract compression horsepower from 4.9 million at the end of 2025 to 6.6 million by 2031, representing a 5% CAGR that aligns with broader U.S. gas supply growth expectations.
The research firm highlighted Archrock’s strong Permian Basin positioning, where the company is currently the second-largest contract compression provider with 60-80% of new bookings coming from the region, potentially driving growth beyond broader U.S. production rates.
On valuation, Wells Fargo notes Archrock trades at a 2027E EV/EBITDA multiple of 7.0x versus peers Kodiak Gas Services at 6.9x and USA Compression at 8.4x, despite Archrock’s higher projected EBITDA growth rate of 9% (2025E-2027E) compared to 7% for KGS and 4% for USAC. InvestingPro analysis suggests the stock is currently trading near its Fair Value, with additional insights available in the comprehensive Pro Research Report, including detailed peer comparisons and growth metrics.
In other recent news, Archrock Inc. reported its second-quarter 2025 earnings, which exceeded Wall Street expectations. The company posted an earnings per share of $0.39, surpassing the forecast of $0.38, and achieved a revenue of $383.2 million, which was higher than the predicted $364.08 million. Additionally, Archrock announced a dual listing of its common stock on the NYSE Texas, while maintaining its primary listing on the New York Stock Exchange.
In terms of analyst ratings, Stifel raised its price target for Archrock to $30, maintaining a Buy rating, after assessing the company’s third-quarter financial results as acceptable. Meanwhile, Evercore ISI adjusted its price target slightly downward from $32 to $31, while still maintaining an Outperform rating, highlighting strong demand across Archrock’s service territories. These developments reflect ongoing interest and varied assessments by analysts regarding Archrock’s financial performance and market potential.
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