Freedom says 'buy' on industrial supplier DXP, citing model, M&A, sector outlook

Freedom Broker has initiated coverage of DXP Enterprises, a leading small-cap provider of engineering solutions for the industrial sector, with a "buy" at a target price that implies upside of 33% versus the current market price. The company has a balanced business model and stable cash flow, Freedom argues.

Freedom Broker has assigned a rating to shares of DXP Enterprises for the first time, opening at a “buy,” according to a research note seen by Oninvest. The target price set for the stock is $148 per share. That is 33% higher than current quotes, as on Friday, October 17, shares closed at $111.26 each. In premarket trading this morning, October 20, the stock had added 0.6% as of this writing.

Freedom’s valuation is in line with the most upbeat on Wall Street, based on the latest MarketWatch data. The consensus target price for DXP Enterprises is $138 per share, for upside of 24%. All three analysts covering the company recommend “buy."

DXP Enterprises is a leading distributor of engineered solutions to the North American industrial sector, Freedom wrote. Its portfolio includes water and wastewater systems, pumps, and bearings. It offers equipment repair and maintenance, supply chain management, and renewable energy solutions.

The company’s products are used in sectors ranging from oil and gas to construction and energy, according to its website. Industry analysts expect those segments to grow, driving demand for DXP’s products and services, Freedom argues. Revenue growth for industrial distributors is closely tied to manufacturing activity, capital expenditures, capacity utilization, and production levels. The Freedom analysts cited the AI build-out as an illustration: spending on data center construction is expected to increase 3.2% in 2025 and 7.1% in 2026.

Another catalyst for DXP Enterprises growth is its steady M&A activity, Freedom wrote. In early October, the company announced the purchase of APSCO, which it described as a leading manufacturer of pumps, control systems, and process equipment for water and wastewater applications.

Taken together, this allows the company to increase its market share, diversify operations, and improve operating efficiency, which ultimately supports long-term value creation, Freedom believes.

One of the risks of investing in DXP Enterprises equity is tariffs which could raise the prices of products the company purchases and reduce demand, Freedom noted.

A second risk is exposure to economic cycles in the sectors DXP Enterprises serves. During downturns, customers often delay or scale back repair and capital projects, reducing DXP revenue, Freedom pointed out.

The AI translation of this story was reviewed by a human editor.