Why Lindblad Expeditions Won't Join The Discount War: Analyst On Long-Term Strategy For Preserving High-End Demand

Stifel analyst Steven M. Wieczynski reiterated a Buy rating on Lindblad Expeditions Holdings Inc. LIND, lowering the price target to $16 from $17.

The analyst notes that the demand for LIND’s high-end products (Antarctica/Galápagos/Alaska) continues to be strong, while demand for some of their shoulder/less desirable itineraries remains mixed.

LIND continues to witness an uptick in price discounting from certain “peers” but noted this is a practice they absolutely won’t participate in as they have conviction in their product quality and are fully aware that if they started to discount ticket pricing, it would take years to recover, Wieczynski adds.

According to the analyst, LIND has some very specific headwinds that are holding their EBITDA expansion back, and most of these headwinds should dissipate as the company moves more into 2024.

The analyst has moderately lowered estimates both in the near-term and out-years to account for the current fuel headwind.

For FY23, the analyst lowered the EPS estimate to $(0.69) from $(0.58).

For FY24, the analyst lowered the EPS estimate to $(0.09) from $0.02.

LIND could easily get their load factors back to normal levels by discounting their product, but that tactic would impair their long-term pricing algorithm, mentions the analyst. 

Demand for luxury/expedition experiences remains extremely high, and the analyst doesn’t see any reason why booking patterns should slow anytime soon.

Price Action: LIND shares are trading lower by 5.50% to $7.91 on Friday.