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BofA remains bullish on Kirby stock, cites supportive inland fundamentals despite rate pressures

EditorEmilio Ghigini
Published 16/12/2024, 12:02
KEX
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On Monday, BofA Securities revised its price target for Kirby Corporation (NYSE:KEX), a prominent player in the marine transportation and diesel engine services sectors. The firm's analyst has reduced the price target to $142.00 from the previous $147.00, while still maintaining a Buy rating on the company's stock.

The stock, currently trading at $117.45, has demonstrated strong performance with a 51.88% return over the past year. InvestingPro analysis reveals the company maintains a healthy financial profile with a "GOOD" overall rating.

The adjustment comes in light of extended maintenance on Gulf Coast crackers, which has decreased Kirby's inland barge utilization to 90% from the previous 92%. This situation is expected to continue into 2025. As a result, the analyst has modified the spot rate target to remain constant at approximately $10,000 per day for a boat and two 30,000-barrel barges. With an EBITDA of $680.37 million and revenue growth of 7.94%, the company maintains strong operational metrics.

According to InvestingPro, there are 6 additional key insights available for subscribers, including valuable data on the company's growth prospects. This is a shift from earlier expectations that rates could rise to between $11,000 and $11,500 per day, despite some rates being locked in at these higher levels.

Despite the current spot rates remaining subdued, Kirby is actively renewing around 40% of its contract book in the fourth quarter. The company has also indicated expectations for upper-single-digit contract rate renewals. Although there is seasonal weakness, the analyst believes that the fundamentals of inland supply and demand continue to be supportive of the business.

The company's strong financial position is evidenced by its healthy current ratio of 1.67 and attractive PEG ratio of 0.38, suggesting reasonable valuation relative to growth. For detailed financial analysis and comprehensive valuation metrics, investors can access the full Pro Research Report available on InvestingPro.

Kirby has observed that spot rates are running approximately 10% higher than term rates, with term rates progressively aligning with spot rates. The fourth quarter's utilization rates were also likely influenced by the uncertainty surrounding the U.S. election period, according to the company.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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