Norwegian Cruise Line's Strong Q2 Growth Not Enough For Recovery: Analyst Downgrades To Neutral

Susquehanna analyst Christopher N. Stathoulopoulos downgraded Norwegian Cruise Line Holdings Ltd NCLH to Neutral from Positive at a price target of $17 following Q2 FY23 results.

Yesterday, NCLH reported second-quarter FY23 sales growth of 85.7% year-on-year to $2.21 billion, beating the analyst consensus of $2.18 billion. Adjusted EPS of $0.30 beat the consensus of $0.27.

The analyst believes the company's adjusted EBITDA will take "some time" to return to the pre-pandemic level.

The analyst raised the H2 FY23 adjusted EPS estimate by $0.10 to $0.75 on a slightly better outlook for margins.

The analyst prefers moving to the sidelines, as a formal long-term guide is likely several months away and reflecting solid peer performance.

For FY24, Stathoulopoulos lowered the adjusted EBITDA estimate by ~1% to ~$2.1 billion (~8% below consensus) and adjusted EPS estimate by ~8% to $1.05 (~35% below consensus) on a modestly weaker margin and a higher share count. 

Apart from this, Barclays lowered the price target to $21 from $22, maintaining an Equal-Weight rating. 

Price Action: NCLH shares are trading lower by 3.58% at $18.72 on the last check Wednesday.