Mizuho has maintained its Outperform rating on Flowserve Corp . (NYSE: NYSE:FLS) and increased its price target to $58 from the previous $53 in view of Flowserve's robust operational performance in the second quarter.
The firm, on Wednesday, pointed out the company's unexpected share price underperformance, suggesting a potential rebound. It reported $1.25 billion in total bookings, bolstered by a record aftermarket performance that exceeded $600 million.
Bookings have risen by 12%, and the wins include three significant contracts in the Middle East. The company's book-to-bill ratio remains above 1.
Despite a negative operating cash flow, expectations are set for an improvement in the second half of the year, with a 7-day enhancement in the cash conversion cycle. Mizuho encourages investors to "buy the dip," anticipating a stronger financial outlook for Flowserve.
The firm has raised its estimated earnings per share (EPS) for 2024 to $2.73, up from the previous estimate of $2.60, and for 2025 to $3.13 from $3.00, citing effective operational execution.
Flowserve's second-quarter achievements have been significant, with a 12% increase in bookings and the expansion of its market reach, including three major contracts in the Middle East. The company's record aftermarket bookings have played a crucial role in this growth. Despite the current negative operating cash flow, Mizuho expects an upswing in the latter half of the year due to improved cash management.
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