On Thursday, BofA Securities updated its financial outlook on World Kinect (NYSE:WKC), increasing the price target to $26.00 from the previous $23.00. Despite the raised target, the firm maintained its Underperform rating for the energy management company's stock.
The adjustment follows World Kinect’s Investor Day, which took place in New York City on Wednesday. At the event, the company's leadership, including CEO Michael Kasbar and CFO Ira Birns, outlined financial targets for the upcoming years. World Kinect aims to achieve a 30% net operating margin by 2026, slightly above BofA Securities' own forecast of 29.9%.
The company also presented its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) goals, setting a range of $480-$520 million for 2026. This projection represents an 8-10% compound annual growth rate from the $386 million expected in 2023. BofA Securities' projection aligns closely with this target, forecasting a $491 million adjusted EBITDA for 2026, up from its previous estimate of $459 million.
Furthermore, World Kinect has set an ambitious target for its free cash flow, aiming to accumulate $900 million to $1.2 billion between 2024 and 2028. In addition, the company plans to enhance the profitability of its Land segment, targeting a 30% net operating margin by 2026, up from 24% in 2023.
The company also intends to reduce its Corporate Expenses to 9% of gross profits from the 10% reported in 2023. This reduction is expected to contribute an additional $40 million to its adjusted EBITDA, supplementing the approximately $114 million EBITDA growth anticipated by 2026. BofA Securities had a slightly more conservative estimate, previously forecasting Corporate Expenses at 8%.
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