Goldman Sachs Sets Price Target for Norwegian Cruise Line Holdings (NYSE:NCLH)

Loop Capital upgraded Norwegian Cruise Line (NYSE:NCLH) to Buy from Hold, holding its price target steady at $25. The firm points to a compelling entry point after a roughly 40% drop in the stock year-to-date, noting the shares now trade at an attractive discount based on discounted cash flow valuations.

Analysts are broadly optimistic about the cruise sector, viewing it as well-positioned to gain market share even in a downturn. Norwegian’s pricing—typically around 30% lower than comparable land-based vacations—adds to its recession-resistant appeal.

The upgrade also follows a recent christening voyage of Norwegian’s newest ship, Aqua, part of its first Prima Plus class. The ship is 10% larger than its predecessors and expected to accommodate nearly 4,000 guests. Its modern design is seen as a strong fit for Norwegian’s core customer base and could command premium pricing relative to the rest of the fleet.

Further supporting the long-term growth narrative, Norwegian is making strategic investments in its private island destination, Great Stirrup Cay, including a new pier and additional amenities aimed at enhancing the guest experience.

Norwegian Cruise Line (NYSE:NCLH) posted stronger-than-expected fourth-quarter earnings, as higher onboard spending fueled a jump in net yield.

The cruise operator reported adjusted earnings per share of $0.26, more than double the $0.11 analysts had forecast. Revenue for the quarter reached $2.1 billion, aligning with expectations. The company’s net yield—a key measure of profitability—jumped 9% year-over-year, beating prior guidance by 210 basis points, thanks to robust guest spending on board.

The company highlighted 2024 as a year of strategic transformation, with record-breaking revenue, strong net yield growth, and a rise in adjusted EBITDA.

For the full year 2025, Norwegian Cruise Line anticipates adjusted earnings per share of $2.05, slightly below Wall Street's estimate of $2.09. The company projects adjusted net income of approximately $1.07 billion and an 11% rise in adjusted EBITDA to $2.72 billion. Norwegian expects net yield to grow 3% on a constant currency basis, a more moderate pace compared to last year's surge.

• Morgan Stanley maintains an "Underweight" rating for NYSE:NCLH, with a raised price target to $19 from $17.50.
• Strong third-quarter performance expected for NCLH, driven by robust consumer demand and effective pricing strategies.
• The current stock price of NCLH is $24, with a slight decrease of 0.46% or $0.11.

Norwegian Cruise Line Holdings (NYSE:NCLH) is a prominent player in the cruise industry, offering a range of travel experiences across its fleet. The company competes with other major cruise lines like Carnival Corporation and Royal Caribbean. On October 30, 2024, Morgan Stanley maintained its "Underweight" rating for NCLH, with the stock trading at around $23.95. Despite this, Morgan Stanley raised its price target to $19 from $17.50.

NCLH is expected to report strong third-quarter performance in 2024, driven by robust consumer demand and effective pricing strategies. This positive outlook has investors contemplating whether to invest in the stock before the earnings release. The current stock price is $24, reflecting a slight decrease of 0.46% or $0.11.

Today, NCLH's stock has fluctuated between $23.42 and $24.09. Over the past year, it has seen a high of $24.80 and a low of $12.71. The company's market capitalization stands at approximately $10.55 billion, indicating its significant presence in the market.

The trading volume for NCLH on the NYSE is 3,981,018 shares, suggesting active investor interest. As the company prepares to release its earnings, the market will closely watch how these factors influence the stock's performance.

On Wednesday, May 1, 2024, before the market opened, Norwegian Cruise Line Holdings (NCLH) reported its earnings with an actual earnings per share (EPS) of $0.04026, falling short of the estimated $0.12. The company's revenue stood at approximately $2.19 billion, slightly below the expected $2.24 billion. This announcement was part of the company's first quarter 2024 earnings conference call, as detailed by Seeking Alpha, which featured discussions led by key company figures including Sarah Inman from Investor Relations, Harry Sommer, the President, CEO & Director, and Mark Kempa, the EVP & CFO. The call attracted attention from several notable analysts, indicating the high level of interest in NCLH's financial health and strategic direction.

Despite the earnings per share falling short of expectations, NCLH showcased significant financial growth, with a revenue of $2.19 billion marking a 20.3% increase from the same period in the previous year. This growth, however, did not meet Wall Street expectations, resulting in a -1.98% surprise compared to the Zacks Consensus Estimate of $2.24 billion. The company's performance in the first quarter ended March 2024 reflects a robust recovery and growth, highlighting its operational efficiency and financial health. This is further evidenced by the improvement in the company's earnings per share (EPS), which came in at $0.16, a significant turnaround from the -$0.30 reported in the year-ago quarter, and exceeding the consensus EPS estimate of $0.12 by +33.33%.

The financial metrics reported by NCLH indicate a strong market position and potential for future growth. The company achieved a net income of $17.35 million and a gross profit of $803.79 million for the most recent quarter. Operating income stood at $218.39 million, with EBITDA reported at $21.1 million. These figures demonstrate NCLH's ability to generate profit and manage its expenses effectively, despite the slight shortfall in revenue compared to expectations.

However, shares of NCLH experienced a decline of 2.8% in premarket trading following the announcement. This decline occurred even though the cruise operator surpassed profit expectations and raised its full-year outlook, indicating continued record demand for its services. The mixed reaction in the stock market underscores the complexity of investor sentiment, which can be influenced by both the achievement of financial milestones and the meeting of market expectations.

For the quarter, NCLH reported a cost of revenue of approximately $1.39 billion, with income before tax at $18.35 million and an income tax benefit of $1.001 million. These figures provide a detailed view of the company's financial operations, including its ability to manage costs and navigate the tax environment. The detailed financial report, including the slight miss on revenue expectations and the positive surprise in EPS, offers a comprehensive picture of NCLH's current financial standing and its trajectory for growth in the competitive cruise industry.

Deutsche Bank analysts provided their key takeaways from Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) Investor Meeting, finding management's tone to be historically bullish.

While the analysts would characterize the stock as having rekindled some interest on the long side in mid-to-late summer, their sense is that investors still view cruise more broadly as a "show me" story, with generic 2023 expectations for the group implying an exceptionally sharp ramp in earnings.

For its part, the company's management made a plausible case as to why it is confident, reiterating prior commentary that 2023 EBITDA should exceed 2019's record level. Simply stated, the company has the benefit of additional high-yielding capacity that it did not have in 2019, as well as a primarily U.S.-centric, higher-end customer base. That said, the fact remains that the company will need to move from "slightly positive" EBITDA in H2/22 to something in the range of $1.1 billion or more in H2/23.