Wednesday, Goldman Sachs initiated coverage on Viking Holdings (NYSE:VIK) stock, a $20.9 billion market cap cruise operator, with a Neutral rating and a 12-month price target of $49.00.
The firm's analyst cited several positive aspects of Viking Holdings' business model, including its significant exposure to a growing demographic that tends to book travel plans further in advance and at higher prices.
Additionally, the analyst noted Viking Holdings' industry-leading category expansion, which has driven impressive revenue growth of 14.1% over the last twelve months. InvestingPro data reveals the company maintains a "GREAT" financial health score of 3.22, suggesting strong operational fundamentals.
Despite these strengths, the analyst expressed caution due to Viking Holdings' stock performance, which has soared 73% since the company's initial public offering (IPO) in May 2024, with an impressive 85.8% return over the past year. The current valuation of Viking Holdings carries a premium compared to its competitor, Royal Caribbean (NYSE:RCL), trading at an EV/EBITDA multiple of 19.3x.
According to InvestingPro's Fair Value analysis, the stock appears slightly overvalued at current levels, which has led the firm to seek a more attractive entry point before becoming more bullish on the stock.
Viking Holdings' visibility into future bookings, with the year 2025 already 70% booked, and its strategy to maintain a significant cash reserve were highlighted as factors that may limit near-term financial estimate revisions and share repurchase opportunities compared to its peers. This strategic approach underpins Goldman Sachs' neutral stance.
The price target of $49.00 reflects a modest 1% upside from the current level and is based on a 13.0X multiple of Viking Holdings' projected 2026 enterprise value to EBITDA (EV/EBITDA), which is slightly above Royal Caribbean's 12.5X multiple. The analysis suggests a balanced risk/reward scenario for Viking Holdings at its present valuation.
In other recent news, Viking Holdings has been making significant strides in its financial performance and operational expansion. The cruise operator posted robust Q3 results, with adjusted earnings per share of $0.89, outperforming the consensus estimate of $0.82. Revenue for the quarter was reported at $1.68 billion, marginally surpassing analyst projections of $1.67 billion.
In addition, Viking Holdings expanded its fleet with the new ocean ship Viking Vela, designed for potential future retrofitting with hydrogen-ready capabilities. The company also demonstrated promising advance bookings, selling 95% of its capacity for the 2024 season and 70% for the 2025 season.
Regarding analyst outlooks, Citi initiated coverage of Viking Holdings with a Buy rating and a $54 price target, highlighting the company's strong position in the cruise industry. Conversely, Barclays (LON:BARC) adjusted its rating on Viking Holdings from Overweight to Equalweight, citing slower potential for earnings growth in 2025 compared to its peers.
Truist Securities recently increased the price target for Viking Holdings to $49.00, up from the previous $38.00, while maintaining a Hold rating on the stock. These are the latest developments in Viking Holdings' operations and market outlook.
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