On Wednesday, Viking (NYSE:VIK) stock received a positive outlook from Melius, as the firm initiated coverage with a Buy rating and a price target of $37.00.
The company's dedication to its travel services and customer experience was highlighted as a key factor in positioning Viking as a preferred option within the high-end luxury travel market.
Viking's business model, characterized by an 11-month booking curve, is expected to provide more stability compared to other segments in the travel industry.
This extended booking period is anticipated to reduce quarter-to-quarter fluctuations, offering a unique investment opportunity in an industry that is typically asset-heavy.
The company has demonstrated robust financial growth, with revenue increasing by 16% annually and EBITDA by 22% from 2017 through 2023.
Looking ahead, Melius forecasts that Viking's revenue will continue to grow at a similar rate of 15%, while EBITDA growth is projected to accelerate to 24% over the next three years. This growth is attributed to the leverage within Viking's business model.
The analyst from Melius underscored Viking's potential for compounding growth, driven by its ability to expand within a growing customer base that shows resilience to the fluctuating news cycle.
This customer base is seen as more resistant to economic changes, further adding to the company's appeal for investors seeking long-term growth.
InvestingPro Insights
As investors consider Melius's optimistic outlook on Viking (NYSE:VIK), it's valuable to supplement the analysis with current data and insights. According to InvestingPro, Viking is trading near its 52-week high, with a price that is 97.35% of that peak, indicating a strong market confidence in the company's performance. Despite not being profitable over the last twelve months and with a P/E ratio that reflects this at -13.08, the company has shown impressive revenue growth of 48.32% over the same period. This growth trend is also supported by a substantial 224.32% increase in EBITDA, showcasing the company's potential for scaling its operations efficiently.
One of the InvestingPro Tips indicates that Viking's short-term obligations exceed its liquid assets, which could pose a liquidity risk. However, investors may also consider the company's significant gross profit margin of 40.82% as a sign of its pricing power and operational efficiency. With these financial metrics in mind, Viking's position as a prominent player in the Hotels, Restaurants & Leisure industry is further solidified, offering a compelling narrative for potential investors.
For those looking to delve deeper into Viking's financial health and market potential, InvestingPro offers additional tips. Using the promo code PRONEWS24, investors can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a wealth of insights that could guide investment decisions. Currently, there are 5 additional InvestingPro Tips available for Viking, which can be found at https://www.investing.com/pro/VIK.
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