Sep. 3 at 4:52 PM
Wells Fargo initiated coverage of Archrock with an Overweight rating and
$30 target, citing the contract compression provider’s leverage amid rising U.S. natural gas supply.
The broker expects ~20% total return potential: 4% dividend yield, 14% dividend growth, and 2% buybacks.
AROC, the second-largest compressor in the Permian Basin, could benefit from a 5% CAGR in U.S. gas supply through 2031, driven by LNG demand, AI data center energy needs, and reshoring.
Wells Fargo projects compression capacity to rise from 4.9M HP in 2025 to 6.6M by 2031. Permian concentration (60–80% of new orders) may add upside if gas-to-oil ratios exceed expectations.
AROC trades at 7x EV/EBITDA for 2027, in line with KOG and below USAC, despite stronger growth and lower leverage. EBITDA is projected to grow at a 9% CAGR (2025–2027) vs. 7% for KOG and 4% for USAC.
$AROC $USAC $KOG