With Covid-19 disruptions in the rearview mirror and the cruise industry back on track, another cruise line has taken a step toward possibly going public. Viking Holdings said last week it submitted a draft registration statement with the U.S. Securities and Exchange Commission relating to a proposed initial public offering. The move comes at a time when the IPO market is expected to open back up after slumping in 2022 amid the Federal Reserve ‘s rate hikes. Melius Research believes a Viking IPO makes rational sense. “The cruise industry is hitting its stride , with demand roaring back and accelerating, but there is further upside as costs moderate and balance sheets improve,” analyst Conor Cunningham wrote in a note Wednesday. Cruise lines were the last in the travel industry to recover from the Covid-19 pandemic. Norwegian Cruise Line , whose recovery has lagged its rivals, reported on Tuesday its first profitable year since 2019 . While shares of Norwegian, Royal Caribbean and Carnival are all down so far this year, they had a blockbuster 2023. Royal Caribbean surged nearly 162% last year, while Carnival rallied 130% and Norwegian gained about 64%. Despite concern about a peak in demand, the data doesn’t support a slowdown, Cunningham said. “What the industry really needs is fresh investor eyes and a potential incremental buyer. A Viking IPO could bring both,” he said. The analyst has buy ratings on Royal Caribbean, Carnival and Norwegian. He expects Norwegian to rise 12% over the next year, based on his $21 price target. As for Carnival and Royal Caribbean, the analyst sees more than 25% upside from Tuesday’s close. He has a price target of $20 on Carnival and a forecast of $155 on Royal Caribbean. This is also the latest sign of an IPO market that could make a comeback . In 2022 and 2023 combined, only 92 companies went public, well below the 311 seen in 2021. Year to date already, there have been more than 30 initial public offerings.
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