BofA cuts Kirby stock price target to $123, maintains Buy rating

On Friday, BofA Securities adjusted its financial outlook for Kirby Corporation (NYSE:KEX), reducing the price target from $133.00 to $123.00 while reaffirming a Buy rating on the company’s stock. The revision reflects a tempered earnings forecast due to increased weather-related delays, particularly around the Houston Ship Channel, which have affected the company’s operations earlier in the year. With a market capitalization of $5.88 billion and a current trading price of $102.89, InvestingPro data shows the company maintains a GREAT financial health score, suggesting resilience despite operational challenges.

Analysts at BofA Securities have revised their first-quarter and full-year 2025 earnings per share (EPS) estimates for Kirby Corporation downwards by 8% and 2%, respectively. The new estimates are set at $1.23 for the first quarter, down from $1.33, and $6.35 for the full year, down from $6.45. This adjustment is attributed to a higher than expected number of weather delay days, which have increased to 4.0% of voyage days from the previous 3.2%, and up from 3.4% the previous year. InvestingPro data reveals that 4 analysts have recently revised their earnings downward for the upcoming period, with the company’s next earnings report scheduled for April 24, 2025.

Despite these challenges, BofA Securities anticipates higher utilization rates for Kirby Corporation compared to the previous year, due to increased demand. The firm’s analysts now project a 95% utilization rate, a rise from the prior estimate of 92% and an improvement from 93% reported a year ago. Industry sources suggest that day rates for barges have remained steady at approximately $10,000-$10,500 per barge set per day, with indications of a firming trend.

The increased impact of delay days has led BofA Securities to slightly lower their forecast for Kirby’s Inland margin to 19.3%, down from the previous estimate of 19.8%, yet still higher than the 19.0% margin from a year prior. Despite this, the firm maintains a positive outlook on Kirby Corporation’s potential for margin improvement throughout the year, with projections indicating a possible increase to 22.5%-24.5% in the remaining quarters of 2025.

In other recent news, Kirby Corporation reported its Q4 2024 earnings, revealing adjusted earnings per share of $1.29, missing the analysts’ forecast of $1.37. The company’s revenue also fell slightly short of expectations, coming in at $802.32 million compared to the anticipated $803.28 million. Despite this, Kirby demonstrated strong operational performance with a 24% year-over-year increase in adjusted EPS and significant free cash flow generation, which was used to reduce debt by $105 million. Meanwhile, S&P Global Ratings revised Kirby’s outlook to positive from stable, affirming its ’BBB’ credit rating due to strong credit metrics, including a nearly 70% funds from operations to debt ratio for 2024.

Stifel analysts maintained their Buy rating for Kirby, with a price target of $135.00, highlighting robust demand and potential merger and acquisition opportunities in the inland barge market. Kirby’s marine transportation segment showed a significant 11% increase in revenue, contributing to a 6% growth in consolidated revenues for 2024. The company’s strategic acquisitions continued, with approximately $80 million invested in inland barge purchases. However, the distribution and services segment faced challenges, with a decline in traditional oil and gas services partly offset by strengths in power generation.

Kirby projects a 15-25% increase in earnings per share for 2025, with inland marine revenues expected to grow in the mid to high single digits. The company remains optimistic about margin improvements, despite inflationary pressures and potential tariffs impacting marine transportation. The industry’s tight barge supply, coupled with steady rate increases, is anticipated to lead to high-single digit revenue growth in marine transportation.

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