Knife River (KNF) can likely exceed its original 20% EBITDA margin target for 2025 without the need for any mergers and acquisitions as the company has not seen any softness outside of normal seasonal weakness, Oppenheimer said in a note emailed Tuesday.

According to the note, the Infrastructure Investment and Jobs Act, or IIJA, and state-level spending remain a tailwind for the business as there's a steady flow of public projects which have not seen any slow down.

Furthermore, with an overwhelming majority of Knife River's contracting business coming from public works, the business line is insulated as it is less sensitive to economic slowdowns, the note said. The contract business can also benefit from pending infrastructure authorization of $939 million in Idaho, according to the note.

In the private construction side, the supplier of construction materials could benefit from data center demand, particularly in Oregon and Wyoming where land is cheap and cold weather helps with cooling, according to Oppenheimer.

"We are more confident in the path to 20%-plus EBITDA margins (vs. 16% in FY24)," Oppenheimer said.

The company reported Q4 results on Feb. 13 and said it was expecting full-year 2025 adjusted EBITDA of $485 million to $535 million, which does not include the impact of any acquisitions including the Strata acquisition.

The firm said it remains bullish on the stock given its "solid fundamentals" and maintained an outperform rating with a $120 price target.

Shares were up 1.7% in recent trading.

Price: 91.71, Change: +1.50, Percent Change: +1.66