Investing.com -- Jefferies upgraded Viking Holdings to Buy while downgrading Norwegian Cruise Line Holdings to Hold in a note on Monday, citing diverging growth visibility and balance sheet trajectories heading into 2026.
In a sector-wide outlook, Jefferies analyst David Katz told investors that it is “bullish group-wide” for 2026, applying criteria focused on “business and management quality, visible growth, and reasonable valuation.”
Within that framework, the firm said it is “upgrading VIK to Buy on sustained growth in capacity and pricing,” while “downgrading NCLH to Hold on strategic shifts and sustained leverage.”
Katz argued that European exposure should be a key differentiator for cruise operators.
Addressing concerns over Norwegian’s recent redeployment of capacity, the analyst stated: “Don’t sweat the Caribbean, look to Europe,” adding that operators with greater European exposure “should benefit vs. Caribbean-focused operators.”
Jefferies noted that Viking, with 61% exposure to Europe, stands to gain from reduced competition, particularly if geopolitical conditions improve and fuel prices ease.
The Viking upgrade reflects what Jefferies described as “continued strong growth and business model quality, and beneficial positioning in luxury.”
The firm expects “industry-leading net yield growth of 5% and 4% in FY26-FY27,” alongside high-teens EBITDA growth and “a FCF conversion rate of ~100%,” supporting sub-1.0x leverage and capital returns.
By contrast, Jefferies believes Norwegian faces mounting challenges.
“Continued slippage on expectations for deleveraging, paired with a rushed capacity and strategy shift,” have tempered its view.
The firm warned that moving “10% of FY26 capacity from Europe to the Caribbean on short notice is likely to interrupt normal bookings and result in yield headwinds,” while leverage expectations have worsened materially.
