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On Monday, Jefferies initiated coverage on Viking Holdings (NYSE:VIK), assigning a Hold rating to the company’s stock and setting a price target of $45.00. Currently trading at $39.34, the $17.43 billion market cap company continues to stand out as the sole major public entity actively engaged in both River and Ocean business segments. According to InvestingPro data, analyst targets range from $45 to $58, suggesting potential upside.
According to Jefferies, Viking Holdings benefits from its horizontal integration, which allows for effective cross-selling opportunities between its Ocean and River offerings. The company’s exclusive focus on luxury fleets has been instrumental in securing higher yields compared to its competitors, with revenue growing 13.23% and maintaining a healthy 42.84% gross margin. This advantage is somewhat mitigated by the increased costs associated with maintaining such a fleet.
Jefferies also pointed out a potential concern regarding Viking Holdings’ ownership structure. Viking Capital Limited controls approximately 87% of the voting shares, despite holding around 53% of the economic interest in the company. This dual-class ownership is seen as a possible issue by the firm.
Despite acknowledging the positive aspects of Viking Holdings’ operations, Jefferies suggests that there may be other stocks in the market with more potential for upside. The investment firm’s analysis indicates a cautious approach to Viking Holdings, considering the current dynamics and ownership structure of the company.
In other recent news, Viking Holdings reported fourth-quarter 2024 earnings with gross and net revenues of $1.35 billion and $869 million, respectively, aligning with market expectations. The company achieved an adjusted EBITDA of $306 million, surpassing both Stifel’s forecast of $300 million and the market consensus of $297 million. Viking Holdings’ earnings per share on a GAAP basis were $0.24, with an adjusted EPS of $0.45, exceeding Stifel’s and the consensus estimate of $0.36. The company maintained a stable net leverage of 2.4 times and reported deferred revenues of $4.1 billion, with an anticipated capacity growth of 12% for fiscal year 2025.
Additionally, Viking expanded its fleet with the introduction of the Viking Nerthus, a new river ship featuring hybrid propulsion and energy-efficient technologies. This launch is part of Viking’s plan to introduce 25 more river ships by 2028 and nine additional ocean ships by 2030. In analyst updates, BNP Paribas (OTC:BNPQY) Exane initiated coverage on Viking Holdings with an Outperform rating and a price target of $47.00, while Stifel maintained a Buy rating with a $52.00 target. S&P Global Ratings upgraded Viking Cruises Ltd.’s credit rating from ’BB-’ to ’BB’, citing strong performance and expected deleveraging.
These developments come amid a broader downturn in travel stocks, influenced by Delta Air Lines (NYSE:DAL)’ reduced profit guidance, which has affected investor sentiment across the travel sector.
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