Nomura Securities Downgrades Flowserve Corp. (FLS) to Reduce

Nomura Securities downgraded Flowserve Corp. (NYSE: FLS) from Neutral to Reduce with a price target of $38.00, calling it expensive relative to peers with few near-term earnings catalysts.

Analyst Jonathan Wright commented, 'FLS is using the current downturn to reshape its business. The number of manufacturing sites is planned to fall from 80 to 57, but direct labour headcount in EMs will grow by 25% as FLS shifts resources out of western Europe and into lower cost regions."

"These changes, however, will take time with the run-rate savings of USD 215m expected to be achieved by 2018. In the near term, the earnings outlook less rosy with reports of 10-15% discounts on large projects and emerging price pressure on standard product (PNR) suggesting that the implied organic drop-through of ~30% embedded in the 2016 guide may come under pressure. "

For an analyst ratings summary and ratings history on Flowserve Corp. click here. For more ratings news on Flowserve Corp. click here.

Shares of Flowserve Corp. closed at $43.91 yesterday.

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