JP Morgan analyst Matthew Boss reiterated an Overweight rating on the shares of Viking Holdings Ltd (NYSE: VIK ) and raised the price target to $58 from $50.

From 2017 to 2019, VIK’s pre-pandemic annual revenue growth averaged approximately 29%, driven by around 23% capacity growth and 5% net yield growth, said the analyst.

Looking ahead, the 2025 booking curve is 70% filled with a 7% pricing increase and 12% capacity expansion, leading to an estimated 5% yield growth and a 19% increase in top-line revenue, surpassing the ~7% average growth of the Big 3 cruise lines, added the analyst.

Importantly, management noted a consistent relationship between capacity and yield growth, with projections indicating a 6% net yield increase in 2026 with 10% capacity growth.

The analyst suggests a compound annual growth rate (CAGR) of around 16% from 2025 to 2027, driven by a 4.3% yield CAGR, which is roughly double (or ~800bps higher) than the Big 3 cruise lines’ average of 8%.

According to the analyst, VIK primarily targets its customer base from the North American flyover region, with around 90% of its clientele coming from the U.S.

These consumers tend to be of higher income, averaging $8K in spending per trip, and are typically in the 55+ age bracket, which allows for more leisure time to travel.

VIK’s target demographic, aged 55+ and with higher incomes, is poised to take advantage of the cruising trend and benefit from a generational wealth transfer.

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On the cost side, management aims to achieve a net yield to vessel operating ex-fuel spread of approximately 200 basis points annually.

The analyst noted the management citing a new marketing CRM and transition of the brand’s marketing mix more direct to consumer with younger demographics aging up into the target age group, noting the prospect to leverage a database with over 56 million North American households, including the 1.5 million households of prior Viking passengers.

The analyst projects strong annual free cash flow generation of about $1.2 billion through 2027. Maintaining the minimum cash balance of $1.8 billion and leverage at approximately 3.0x would yield nearly $9 billion in free cash flow available for deployment over the next three years, equating to about 40% of the outstanding shares.

Viking’s focus on educational experiences, destination-driven itineraries, and its “One Brand” marketing approach foster strong customer loyalty, as evidenced by over 60% of bookings for new product launches coming from past guests, and a repeat guest rate of approximately 51%, up from 26% in 2015, concluded the analyst.