Viking Holdings' Premium Valuation Warrants A More Favorable Entry Point: Analyst

Goldman Sachs analyst Lizzie Dove initiated coverage on Viking Holdings Ltd VIK with a Neutral rating and price forecast of $49.

The analyst highlights that Viking Holdings’ business model has strong appeal due to its high exposure to a growing demographic booking ahead at higher prices and its industry-leading category expansion, which boosts revenue growth.

However, due to the stock rising 73% since its IPO in May 2024 and a valuation premium compared to Royal Caribbean Cruises Ltd. RCL, the analyst is looking for a better entry point.

The analyst also notes that Viking Holdings high booking visibility (70% booked for 2025) and its desire to maintain a cash cushion suggest less potential for near-term estimate revisions and share repurchases.

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Dove points out that Viking Holdings’ core demographic mainly consists of affluent US travelers aged 55+, a fast-growing group with the highest wealth, representing about 30% of the population but over 70% of the wealth.

However, the analyst notes that the company’s customer base is less new-to-cruise compared to its peers, which has been a major growth driver for the cruise industry over the past two years.

The analyst highlights that Royal Caribbean and Carnival Corporation CCL have experienced double-digit growth in new-to-cruise passengers, with around half of their guests being millennials or younger.

While Viking Holdings has an appealing demographic and a strong pipeline of potential cruisers, Dove sees less opportunity for Viking Holdings to benefit from the new-to-cruise growth that has supported the broader industry.

Price Action: VIK shares are trading lower by 1.30% to $47.86 at last check Wednesday.

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