Norwegian Cruise Line Soars with Strong Earnings and New Development Plans
Growth in Demand Fuels Recent Stock Surge
Norwegian Cruise Line Holdings Ltd. (NCLH), based in Miami, Florida, offers cruise travel services and has a market cap of $12.2 billion. The company provides a diverse range of cruise itineraries, including themed cruises, and promotes its services through various channels such as retail, travel agents, and direct consumer sales.
In the past year, shares of this prominent cruise line have significantly outperformed the market. NCLH has risen 111.5%, compared to a 35.5% increase in the S&P 500 Index ($SPX). So far in 2024, NCLH stock has gained 39.1%, outpacing the SPX’s rise of 25.5% year-to-date.
Comparison with Industry ETF
When compared to the Defiance Hotel, Airline, and Cruise ETF (CRUZ), NCLH’s performance appears less dramatic. The ETF has climbed approximately 44.6% over the past year, while NCLH’s year-to-date performance has surpassed the ETF’s returns of 22.7%.
This surge in performance can be attributed to NCLH’s “Charting the Course” initiative, which aims to enhance company culture, guest experience, and efficiency. The cruise sector is currently witnessing increased demand for sea vacations, and NCLH’s focus on balancing expenses with pricing has been well accepted by investors. Additionally, the company plans to invest $150 million in a two-ship pier at its private island, Great Stirrup Cay, which will allow for more visitors by 2026.
Solid Q3 Earnings Report
On October 31, NCLH saw its shares rise over 6% following a positive Q3 earnings report. The company’s adjusted EPS reached $0.99, exceeding Wall Street’s forecast of $0.95, while revenue hit $2.81 billion, surpassing expectations of $2.76 billion. For the entire fiscal year, NCLH projects an adjusted EPS of $1.65.
Analysts anticipate a remarkable EPS growth of 290.5% for this fiscal year, which ends in December. While the company has a mixed history of meeting earnings estimates, it beat expectations in three of the last four quarters.
Analysts’ Outlook and Ratings
Currently, 17 analysts are following NCLH stock, with an overall consensus rating of “Moderate Buy.” This includes eight “Strong Buy” recommendations, eight “Holds,” and one “Strong Sell.” This trend represents a more bullish view compared to two months ago when seven analysts recommended a “Strong Buy.”
On November 12, Morgan Stanley (MS) reaffirmed an “Underweight” rating while raising its price target for NCLH to $26. Although NCLH trades slightly above its mean price target of $27.72, the highest target of $32 suggests a potential upside of 14.8%.
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On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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