Archrock Upgraded by RBC

Archrock received an investment-rating upgrade Wednesday to outperform from sector perform from RBC Capital Markets which cited its some-of-the-parts valuation of the shares following the natural-gas contract-operations company’s better-than-expected Q2 results released earlier this month. The price target is $13 per share, which compares with the stock’s Tuesday closing price of $9.35.

In a note to clients, RBC said the sum-of-the-parts valuation is based on the value of Archrock’s limited-partner interest in Archrock Partners (APLP), which it also upgraded to outperform Wednesday; the value of general partner/incentive distribution rights interest in Archrock Partners; and the value of cash flow from assets held at the parent level. The upgrade came as RBC updated its estimates across several natural-gas compression master-limited partnerships following Q2 results, highlighting “encouraging macro trends in the gas compression space” while saying Archrock Partners, USA Compression Partners (USAC) and CSI Compressco (CCLP) are all “pointing to better indications for utilization and new orders.”

Leave a Comment