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On Thursday, BofA Securities adjusted its outlook on Norwegian Cruise Line Holdings (NYSE:NCLH), reducing the price target from $23.00 to $20.00, while maintaining a Neutral stance on the company’s shares. With the stock currently trading at $16.03, significantly below its 52-week high of $29.29, the revision follows observations of booking volatility and a softening in the company’s 12-month forward booked position. According to InvestingPro data, five analysts have recently revised their earnings downward for the upcoming period.
Norwegian Cruise Line Holdings, unlike other cruise operators that have reported booking fluctuations, is the first to explicitly acknowledge a decline in its future bookings. BofA Securities noted this change amidst broader concerns about the economic environment and consumer confidence. The company’s challenges are reflected in its stock performance, with InvestingPro data showing a significant 35.57% decline over the past six months. Moreover, a fare sale recently initiated by Norwegian’s Oceania brand and weaker demand observed in other travel sectors, such as airlines, were cited as contributing factors to the softened outlook.
Analysts at BofA Securities pointed out that while the cruise industry is facing similar challenges, there is still time to adjust due to the typical six-month or longer booking windows. However, in light of the current trends, BofA has revised its earnings per share (EPS) forecasts for Norwegian Cruise Line Holdings downward by 3% for 2025 and 2% for 2026, to $2.07 and $2.53 respectively.
The revised price objective reflects a cautious view of Norwegian Cruise Line’s prospects, considering the company’s high net leverage and weakening top line. The analysts reiterated their Neutral rating, suggesting a wait-and-see approach in the face of these industry-wide headwinds.
In other recent news, Norwegian Cruise Line Holdings reported its first-quarter 2025 earnings, revealing a slight miss on both earnings per share (EPS) and revenue compared to forecasts. The company posted an adjusted EPS of $0.07, falling short of the expected $0.09, while revenue reached $2.13 billion, just under the forecasted $2.15 billion. Despite these challenges, Norwegian Cruise Line exceeded its adjusted EBITDA guidance, reporting $453 million. The company’s net yields increased by 1.2%, surpassing expectations, although a $0.05 foreign exchange headwind impacted the EPS. Looking forward, Norwegian Cruise Line maintains its full-year adjusted EBITDA guidance of $2.72 billion and expects net yield growth of 2-3%.
Goldman Sachs analyst Lizzie Dove recently adjusted the price target for Norwegian Cruise Line shares, reducing it to $18 from $20. Despite this change, Goldman Sachs continues to recommend buying the stock. The analyst expressed surprise at the company’s decision to lower its net yield guidance, contrasting with Royal Caribbean (NYSE:RCL)’s recent positive forecast adjustments. Norwegian Cruise Line’s challenges, including modest growth in the luxury segment and earlier occupancy reductions, predate current economic volatility. The company is also implementing cost-saving measures, such as itinerary changes and the removal of some premium food offerings.
Despite these concerns, Norwegian Cruise Line’s expectations for net revenue per passenger day remain competitive, with a 4% target for the second half of the year. However, the slowing pace of advanced ticket sales, even with increased capacity, suggests the yield outlook might not be fully secure. Norwegian Cruise Line is also focusing on strategic fleet optimization efforts and enhancements to its private island, Great Stirrup Cay, to drive future growth and guest satisfaction.
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