JPMorgan Chase Analyst Matthew Boss reiterates an "overweight" rating on the stock Viking Holdings Ltd. (NYSE: VIK ) and raised its price target to $58 from $50.

The analyst said VIK's pre-pandemic annual revenue growth averaged about 29% from 2017 to 2019, driven by about 23% capacity growth and 5% net profit margin growth.

Looking ahead, the 2025 booking curve will reach 70%, prices will increase by 7%, capacity will expand by 12%, yields are expected to increase by 5%, and revenue will increase by 19%, exceeding the average growth rate of approximately 7%. The analyst added that the three major cruise lines.

Importantly, management noted a consistent relationship between capacity and production growth, with forecasts indicating net production growth of 6% and capacity growth of 10% in 2026.

Analysts suggest a compound annual growth rate (CAGR) of about 16% from 2025 to 2027, driven by a 4.3% yield CAGR, roughly double (or higher) the 8% average for the three major cruise lines out about 800 basis points).

The analyst said that VIK mainly targets the customer base in the North American overpass region, about 90% of which are from the United States.

These consumers tend to have higher incomes, spend an average of $8,000 per trip, are typically over the age of 55, and therefore have more free time to travel.

VIK is targeting those over 55 and with higher incomes who are ready to take advantage of the cruise trend and benefit from intergenerational wealth transfers.

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On the cost side, management is targeting net earnings from operating vessels of approximately 200 basis points per year (excluding bunker spreads).

The analyst noted that management cited a new marketing CRM as well as a shift in the brand's marketing mix to more directly target consumers in younger demographics into the target age group, noting that leverage includes more than 56 million North American households. (includes 1.5 families) database prospects. Millions of families were former Viking passengers.

Analysts expect it to generate strong free cash flow of about $1.2 billion annually by 2027. Maintaining a minimum cash balance of $1.8 billion and leverage of approximately 3.0x will generate nearly $9 billion in deployable free cash flow over the next three years, equivalent to approximately 40% of outstanding shares.

Viking's focus on educational experiences, destination-driven itineraries and its "one-brand" marketing approach has fostered strong customer loyalty, with more than 60% of new product launch bookings coming from past guests and a repeat guest rate of approximately 51% analysts It concluded that this proportion increased from 26% in 2015.

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