Street Calls of the Week
Investing.com -- Mizuho initiated coverage of Viking Holding with an Underperform rating and $54 price target, saying the stock’s premium pricing leaves limited upside despite the company’s high-quality operations.
The brokerage said Viking’s valuation already reflects its unique river and ocean cruise model, leaving few catalysts for re-rating.
The brokerage highlighted three risks which includes new competition, limited river capacity, and stretched relative valuation.
Celebrity Cruises is expected to enter the European river market in 2027, potentially capturing up to 20% of Viking’s river business.
Viking currently holds about 52% share of the North American cohort, and Mizuho said sentiment underestimates the impact of new entrants.
River cruising is inherently capacity-constrained. Unlike ocean itineraries, the number of rivers, ports, and cultural destinations is largely fixed, limiting growth opportunities.
Ocean cruises, by contrast, can expand via new itineraries and private islands, providing more flexibility.
Viking trades at 14.5 times estimated 2026 EBITDA, with free cash flow yield under 4%, a premium to broader cruise peers and comparable to asset-light franchised hotel companies.
Mizuho said this comparison is misleading, as Viking must invest $1600-$1700 per available river day to grow capacity, while hotel models require far less capital per unit of growth. For context, Carnival trades at 7.9x, Norwegian at 8x, and Royal Caribbean at 13.4x 2026 EBITDA.
Mizuho concluded that with valuation stretched, river capacity limited, and potential competitive headwinds, risk/reward is skewed to the downside.
The $54 price target is based on 13 times 2026 estimated EBITDA of $2.09 billion.