Norwegian Cruise Line Holdings Faces Stock Setbacks Despite Strong Revenue

Miami-based Norwegian Cruise Line Holdings Ltd. (NCLH) stands as a major player in the global cruise industry, operating three renowned brands: Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises. With a market capitalization of $8.4 billion, the company excels in delivering luxurious travel experiences to nearly 700 destinations worldwide, supported by a fleet of top-tier ships and a dedicated workforce of over 41,000 team members.

Classified as a “mid-cap stock,” companies with market valuations between $2 billion and $10 billion highlight their notable influence in the leisure and tourism sector. NCLH has pioneered modern cruising and continues to redefine the vacation experience through its focus on excellence and customer satisfaction.

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However, despite these strengths, NCLH has experienced a steep decline of 33.4% from its three-year high of $29.29 achieved on January 31. In addition, the stock has fallen 24.8% over the past three months, significantly lagging behind the Dow Jones Industrial Average, which only dipped 39 basis points in the same period.

NCLH’s long-term performance also trails the Dow. Over the past six months, the stock has decreased by 1.8% and shows a marginal 1.3% rise compared to a 7.8% increase for the Dow over the last year. The company’s recent downturn is further confirmed as NCLH slid below its 50-day moving average in February and subsequently fell below its 200-day moving average in early March.

Interestingly, despite NCLH reporting record revenues and exceeding Wall Street expectations, the stock price declined by 5.3% following its Q4 results announcement on February 27. The company reported a 6.2% year-over-year increase in revenue to $2.1 billion, exceeding analysts’ forecasts by roughly 1%. Furthermore, robust cost management led to a remarkable 30% growth in adjusted EBITDA, reaching $468.2 million. Adjusted EPS climbed to $0.26, a turnaround from a loss of $0.18 a year earlier. The EPS surpassed management’s predictions mainly due to a $0.15 benefit from foreign exchange rates.

Looking at the annual results, NCLH’s adjusted EBITDA rose 32% year-over-year, reaching $2.5 billion, with adjusted EPS jumping to $1.82 from $0.70 in FY23. However, there are concerns regarding more conservative earnings growth expectations for FY25, with predictions of adjusted EBITDA rising to $2.7 billion and EPS reaching $2.05. These forecasts have shaken investor confidence.

Additionally, NCLH significantly lags behind its competitor Royal Caribbean Cruises Ltd. (RCL), which has enjoyed a 21.2% surge over the past six months and a striking 54.3% increase over the past year.

Nevertheless, analysts maintain a cautiously optimistic outlook for NCLH. Among the 20 analysts tracking the stock, the consensus rating is a “Moderate Buy.” The average price target of $29.19 indicates a substantial upside potential of 49.7% from the current levels.

On the date of publication, Aditya Sarawgi had no positions, either directly or indirectly, in any of the securities mentioned in this article. All information herein is for informational purposes only. To read our complete disclosure policy, please click here.

The views expressed in this article are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.