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Thursday - BNP Paribas (OTC:BNPQY) Exane has initiated coverage on Viking Holdings (NYSE:VIK) with an Outperform rating, accompanied by a price target set at $47.00. The research firm’s analyst highlighted Viking’s dominant position in the river cruise industry and its expanding presence in ocean cruising as key growth drivers. According to InvestingPro data, Viking commands a substantial $18.4 billion market capitalization and has demonstrated strong revenue growth of 13.2% in the last twelve months. The company’s stock currently trades at $41.22, with analyst targets ranging from $45 to $58, suggesting potential upside.
Viking Holdings, known for its river cruises, has been recognized for its ability to fill approximately 90% of its capacity before the season begins. This pre-booking strategy has been beneficial for the company’s cash flow, contributing to a low capital employed and a high return on capital employed (ROCE). BNP Paribas Exane projects that Viking’s ROCE, which was around 40% in 2024, is expected to rise to approximately 55% by 2026. The company’s financial strength is reflected in its EBITDA of $1.32 billion and its "GREAT" overall financial health score from InvestingPro.
The analyst from BNP Paribas Exane believes that the market has not fully appreciated Viking’s potential as a long-term compounder, given its strong brand and financial performance. The expected increase in ROCE is seen as an indication of the company’s efficient use of capital and its ability to generate high returns for shareholders.
Viking’s strategic approach to capital management and its expansion into ocean cruising are seen as differentiators that set the company apart from its competitors. The firm’s financial discipline and strong brand have allowed it to maintain a competitive edge within the industry.
The new price target of $47.00 reflects BNP Paribas Exane’s confidence in Viking Holdings’ future growth prospects and its position within the travel and leisure sector. The Outperform rating suggests that the research firm expects the stock to perform better than the broader market in the foreseeable future.
In other recent news, Viking Holdings reported robust financial results for the fourth quarter of 2024, surpassing earnings expectations with an earnings per share (EPS) of $0.45, compared to the forecasted $0.33. The company achieved a 20.5% year-over-year increase in revenue, reaching $1.4 billion, and posted a net income of $104 million, a significant improvement from a loss in the previous year. Viking Holdings also reported an adjusted EBITDA of $360 million for the quarter, marking a 39.7% increase.
Additionally, S&P Global Ratings upgraded Viking Cruises Ltd.’s credit rating from ’BB-’ to ’BB’, reflecting strong performance and anticipated deleveraging. The company has sold approximately 88% of its capacity for 2025, with advanced bookings supporting revenue and cash flow growth. Viking is set to expand its fleet with 10 new river ships and one ocean ship by the end of 2025.
Stifel analysts maintained a Buy rating on Viking Holdings with a price target of $52.00, following the company’s earnings report. Viking Holdings expects a 12% capacity growth for 2025, supported by new ship deliveries. The company also continues to expand its fleet, with the recent addition of the Viking Nerthus to its river cruise lineup, and plans to introduce more ships by 2030.
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