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On Thursday, BTIG analysts upheld their Buy rating and a $140.00 price target for Kirby Corporation (NYSE:KEX) stock, a leading tank barge operator in the United States. The firm's analysts highlighted that despite Kirby's stock experiencing a roughly 20% decline since late November, they anticipate an improvement in the company's financial performance.
Kirby stock has not fared well in the market over the past two months, underperforming in the Transports sector by 1,100 basis points and Energy by approximately 1,500 basis points. Contributing factors include a 15% drop in crack spreads—a key indicator of refined product barge volumes, which account for about 25% of Kirby's Marine revenue—from the third quarter of 2024. Additionally, the fourth quarter saw a 10% quarter-over-quarter decrease in refined barge volumes.
Despite these challenges, BTIG analysts observed positive signs, such as refinery utilization rates rebounding to an average of 90.6% in the fourth quarter, with December marking the highest utilization since July. Furthermore, petrochemical barge volumes, which represent around 50% of Marine revenue, remained relatively stable with a slight 1% quarter-over-quarter decline and a 1% year-over-year increase.
The analysts remain optimistic about Kirby's prospects, expecting the company to continue driving inland barge pricing higher in 2025. This pricing power is forecasted to push Kirby's 2025 inland margins to around 23%, which would be the highest since 2015. The firm's analysts have reiterated their Buy rating on Kirby stock, selecting it as a BTIG Top Pick for the first half of 2025. They believe the company is positioned to overcome seasonal factors that typically affect margins in the fourth and first quarters, such as weather and normal seasonal slowdowns.
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