With Covid-19’s disruption in the rearview mirror and the cruise industry getting back on track, another cruise line has taken a step toward a possible listing. Virgin Holdings said last week it filed a draft registration statement with the U.S. Securities and Exchange Commission in connection with its proposed initial public offering. The move comes as the IPO market is expected to reopen after plunging in 2022 as the Federal Reserve raises interest rates. Melius Research believes Viking’s initial public offering is reasonable. “The cruise industry is hitting its stride, with demand picking up strongly and accelerating, but with costs moderating and balance sheets improving, the industry is still struggling,” analyst Conor Cunningham wrote in a note Wednesday. There is room for further upside.” Cruise lines are among the last in the travel industry to recover from the Covid-19 pandemic. Norwegian Cruise Line, whose recovery has lagged rivals, reported its first profitable year since 2019 on Tuesday. Norwegian Cruise Line, Royal Caribbean and Carnival are poised to perform well in 2023, although their shares are down so far this year. Royal Caribbean’s shares soared nearly 162% last year, while Carnival’s shares rose 130% and Norwegian Cruise Line’s shares rose about 64%. Cunningham said that despite concerns that demand will peak, the data does not support a slowdown in demand. “What the industry really needs is fresh investor eyes and potential incremental buyers. The Viking IPO can bring both of these things,” he said. The analyst has buy ratings on Royal Caribbean, Carnival and Norwegian Cruise Line. Based on a $21 price target, he expects Norwegian shares to rise 12% next year. As for Carnival and Royal Caribbean, analysts expect gains of more than 25% from Tuesday’s closing prices. He has a price target of $20 for Carnival and $155 for Royal Caribbean. It’s also the latest sign that the IPO market may be making a comeback. A total of only 92 companies will go public in 2022 and 2023, down from 311 in 2021. So far this year, more than 30 companies have launched initial public offerings.
