UBS Maintains a 'Buy' on Flowserve (FLS); Q3 Saw Momentum Boost, Especially in AM

UBS maintains a 'Buy' on Flowserve Corp. (NYSE: FLS) price target raised $6 to $111.00.

UBS analyst says, "Aftermarket (AM) booking rose 19% in 3Q and YTD sales are tracking +18%, raising the profit ability and cutting the cyclicality of the business. Some large, long cycle EPD bookings priced at the depths of the 2009 recession pressured 3Q margins, but we foresee this abating in 1H12. We’re also encouraged by working capital progress, and while there’s still work to do we think 4Q will see robust FCF."

"Our view on the stock: Still see favorable risk/reward in FLS shares - We think key catalysts will be 4Q11 results, when we expect good core growth and very strong
FCF, and intra-quarter evidence of demand, especially for MRO in chemical and industrial end markets. We also continue to like FLS’ defensive attributes, including a strong B/S (we forecast net cash at EOY11), high ROIC (19% in 2010), and 40%+ mix of high-growth, high-margin, less cyclical AM exposure."

For more ratings news on Flowserve Corp. click here and for the rating history of Flowserve Corp. click here.

Shares of Flowserve Corp. closed at $90.20 yesterday.

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