On Wednesday, BTIG updated its financial outlook for Kirby Corporation (NYSE: NYSE:KEX), increasing the share price target to $115 from the previous $100 while maintaining a Buy rating.
The firm highlighted the continuous rise in inland spot barge pricing, noting that it has been moving higher in the low to mid-single digits. Consequently, the cost for a two barge tow now ranges between $9,500 and $10,000.
Despite usual seasonal challenges, such as adverse weather conditions and refinery turnarounds, barge pricing has shown resilience and is on an upward trend. BTIG anticipates this trend to persist into the typically stronger spring and summer months.
Although first-quarter barge volumes for refined products have declined by approximately 10% year-over-year due to additional refinery downtime—with February seeing the lowest US refinery utilization since the first quarter of 2021—March volumes demonstrated a significant recovery.
The firm observed that while February product volumes decreased by around 10% year-over-year, March volumes dropped by only about 2% as refinery utilization increased to roughly 87%. This marks a month-over-month improvement of around 600 basis points, though still down 140 basis points from the previous year. Encouragingly, petrochemical volumes have shown a 3-4% increase in the first quarter of 2024 compared to the same period in 2023.
BTIG also reported a substantial year-over-year increase of approximately 23% in March petrochemical volumes, reaching the highest levels within their data set and about 14% higher than the peak observed in October of the previous year.
The firm believes that the current firmness in barge pricing, even during the seasonally weaker part of the year, sets the stage for additional pricing gains as demand increases. They also see a potential for a further 20-25% rise in inland pricing before the economics of new barge construction become justifiable.
InvestingPro Insights
As investors consider the latest analysis from BTIG on Kirby Corporation (NYSE: KEX), real-time data from InvestingPro provides additional context. Kirby Corporation's market capitalization stands at $5.53 billion, and the stock is trading at a P/E ratio of 25.19, which aligns closely with its adjusted P/E ratio over the last twelve months as of Q4 2023. The company's PEG ratio over the same period is notably low at 0.3, suggesting potential for growth relative to earnings.
InvestingPro Tips indicate that Kirby Corporation is currently trading near its 52-week high, with analysts predicting profitability for the year. The stock's low price volatility, coupled with liquid assets surpassing short-term obligations and a moderate level of debt, positions the company as a stable investment. Moreover, the stock's strong return over the last three months, with a 20.12% price total return, reflects the firmness in barge pricing and potential for further gains as noted by BTIG.
For investors looking to delve deeper into Kirby Corporation's financials and stock performance, InvestingPro offers additional tips that can be accessed at: https://www.investing.com/pro/KEX. Use coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the 10 more InvestingPro Tips that can help inform your investment decisions.
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