Why This Norwegian Cruise Lines Analyst Is Turning Bearish

Shares of Norwegian Cruise Line Holdings Ltd NCLH and other cruise line companies have been on a downturn.

Although Norwegian Cruise Line is a “quality company,” its stock has materially outperformed year to data and there is risk to estimates and valuation versus peers, according to Credit Suisse.

The Norwegian Cruise Line Analyst: Benjamin Chaiken downgraded Norwegian Cruise Line from Outperform to Underperform while reducing the price target from $20 to $14.

The Norwegian Cruise Line Takeaways: Unless the company’s cost guidance turns out to be materially conservative, there is downside to the EBITDA forecast for 2023, Chaiken said in a downgrade note.

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“If NCLH can hit their ’23 EBITDA guide (in the context of 25%+ cost growth), that indicates very strong pricing (we think 15-20% vs ’19). In that case, it’s reasonable to assume the entire industry would do well,” the analyst wrote.

“Valuation premium vs peers is likely unsustainable,” and if Norwegian Cruise Line meets its guidance, it implies “more equity upside potential” for Royal Caribbean Cruises Ltd RC or Carnival Corp CCL, he added.

NCLH Price Action: Shares of Norwegian Cruise Line were trading down 8.3% to $16.13 Thursday morning. 

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