The Irving, TX-based company is a manufacturer of flow management equipment.
The company is a preeminent player in flow management, it has massive global reach, its return on invested capital and margin are above peers, after-market sales are 40% of total sales and its capital allocation policy is excellent, the firm said.
"But its largest verticals are the commodities processing complexes, where capital spending is under pressure. Specifically, global oil and gas and chemical capex look down in the mid-teens in 2016, and global power has been flat all cycle," BMO wrote in an analyst note.
The firm is also concerned that pricing will weaken further and that the company's massive restructuring limits earnings in a recovery.
Shares of Flowserve closed lower by 3.07% to $42.56 on Monday.
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C on the stock.
The primary factors that have impacted our rating are mixed.
The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and reasonable valuation levels.
However, as a counter to these strengths, the team also finds weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: FLS