Kirby may see 2017 earnings fall some 30% as its customers keep pressuring rates lower, Seaport Global Securities said in a research report.
Seaport analyst Kevin Sterling, who initiated coverage on the New York-listed tank barge operator, forecast 2017 earnings per share of $1.80, which is well below the $2.31 consensus forecast for the company's earnings this year.
The David Grzebinski-led Kirby owns a fleet of 68 coastal tank barges, along with 881 inland tank barges, making it overall the largest US-based barge operator.
Sterling says the consensus estimates are "unrealistic and need to come down" in light of the continued difficult pricing environment for tank barge operators.
Customers continue to migrate toward spot charters for barges, Sterling says. Spot charters "negatively impact utilization as equipment has to be re-positioned more often which is at the operator's expense."
Spot rates are appear to be down 5% on a year-on-year basis, according to Sterling's channel checks. The decline comes amid still lackluster demand and high barge supply. Customers with barges still under long-term charters are asking for rate relief of as much as 10% in some instances.
"Essentially customers are trying to be innovative and drive down rates," Sterling said. "Shippers are taking advantage of excess spot market capacity, and even when they sign contracts, the duration is shorter, with no incentive to lock into a multi-year contract."
Kirby shares were lower for the day by some $0.60 to $64.80 per share.
