With Covid-19 disruptions in the rearview mirror and the cruise industry back on track, another cruise line has taken a step towards 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 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 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 2023 and 2022 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.
This story originally appeared on CNBC
