On Wednesday, B.Riley adjusted its outlook on Lindblad Expeditions Holdings (NASDAQ:LIND), reducing the price target to $13.00 from the previous $14.00, while maintaining a Buy rating on the stock.
The adjustment follows the company's first-quarter 2024 earnings release, which presented a combination of results that did not fully meet expectations. The firm acknowledged that while Lindblad's revenue exceeded forecasts, costs within the company's segment were higher than anticipated due to the timing of quarterly expenses.
The company's recent performance has included positive developments, such as increased visibility in tour bookings for the current year. Additionally, Lindblad has made progress in integrating sales and marketing efforts with National Geographic and Disney, a move that is expected to contribute to future growth.
Furthermore, the acquisition of another land-based tour operation and increased ownership in two other land-based businesses are seen as strategic steps to enhance profitability in the long term.
Despite these positive indicators, B.Riley has chosen to take a more conservative stance on Lindblad's future earnings before interest, taxes, depreciation, and amortization (AEBITDA), leading to a slight reduction in estimates for 2024 and 2025. This cautionary approach reflects a consideration of the potential challenges in revenue flow-through.
B.Riley's analyst emphasized a belief that the current valuation multiple discount applied to Lindblad in comparison to the mass cruise industry is unwarranted. The analyst underlined the view that this discount does not accurately represent Lindblad's potential to capture a larger share of the adventure travel market in the coming years.
Despite the lowered price target, the firm reiterates its confidence in the company's strategic direction with the continuation of the Buy rating.
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