High-end consumers have a strong foundation. Bank of America Merrill Lynch maintains a "buy" rating on Viking Holdings (VIK.US).

Bank of America recently released a research report, maintaining the "buy" rating for the international cruise giant Viking Holdings (VIK.US), with a target price of $70. The bank believes that Viking Holdings' differentiation and high-end business model will continue to drive strong returns and pricing power. In late September, Viking Holdings updated its booking curve while offering unsecured bond issuance, showing pricing growth for 2026 improved from +4% to +5%, while river cruise pricing accelerated from +6% to +7%. Management pointed out that this was due to strong demand momentum in July and August, driven by a resilient high-end consumer base. This aligns with Bank of America's aggregated credit card and debit card data, which shows that spending has recovered in recent months after slowing down from April to June. Management also expressed confidence in mid to high single-digit pricing growth in the medium to long term, with the 2026 booking curve supporting this. Investors are interested in Viking Holdings' unique brand positioning and strategy compared to other cruise companies, leading to an ROIC exceeding 20%. Management emphasized their focus on all-inclusive, destination-focused, and culturally rich products, differentiating Viking Holdings' offerings. The single brand drives marketing efficiency (53% of repeat customers), while the key baby boomer generation continues to benefit from the growth in wealth and spending power. Capital allocation and leverage are also key areas. Management is satisfied with the cash and leverage situation, even suggesting that they may be under-leveraged (Bank of America's forecast for net debt to EBITDA ratio in 2025 is 1.2 times). Bank of America believes that Viking Holdings' cash priority will be to reinvest in the business or pursue acquisitions before returning capital to shareholders. In terms of acquisitions, potential opportunities may involve dock berths or other reinforcement projects, as Viking Holdings sees its single brand as a core advantage.