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On Tuesday, Loop Capital Markets initiated coverage on Royal Caribbean Cruises (NYSE:RCL) with a Hold rating and a price target (PT) of $250.00. The firm’s analyst, Laura Champine, provided insights into the cruise line industry, offering a Buy rating on Viking (NYSE:VIK) and Hold ratings on Carnival (NYSE:CCL), Norwegian Cruise Line (NYSE:NCLH), and Royal Caribbean. According to InvestingPro data, NCLH has shown impressive momentum with a 74% price return over the past six months, though current analysis suggests the stock is trading above its Fair Value.
Champine’s analysis is based on discounted Net Operating Profit After Tax (NOPAT) models. She expressed a measured view of the legacy cruise lines, noting that their price targets are aligned with the current share prices. The PTs for Carnival and Norwegian Cruise Line are set at $25 and $26, respectively, indicating that these stocks are trading at what Loop Capital considers peak valuations. NCLH currently trades at a P/E ratio of 21.9x and maintains a solid revenue growth of 15.8% over the last twelve months, with analysts forecasting continued profitability this year.
The analyst highlighted that the legacy cruise lines have adjusted EBITDA margins that are expected to remain sustainably above peak levels. The future direction of these stocks in 2025, according to Champine, will likely hinge on whether there is a material slowdown in demand. The firm is awaiting further 2025 guidance from more cruise lines to comment with greater certainty. InvestingPro subscribers can access 8 additional key insights about NCLH, including detailed financial health scores and comprehensive valuation metrics in the Pro Research Report, helping investors make more informed decisions about this volatile stock.
In contrast, Viking is viewed more optimistically due to its higher expected growth rate and lower debt levels. As the smallest public cruise line with a significant portion of its operations on rivers, along with newer ocean ships, Viking is perceived to have better growth prospects. Furthermore, Viking’s recent IPO is seen as an indicator of a strategic focus on profitability. Loop Capital believes Viking has multiple avenues to enhance its profitability.
Champine’s report suggests cautious optimism for the cruise industry as a whole, recognizing the potential for recovery and improvement in balance sheets. However, she maintains a wait-and-see approach for the larger, established cruise lines as the market anticipates additional financial guidance for the year ahead.
In other recent news, Norwegian Cruise Line Holdings has been the focus of several positive developments. Macquarie analysts have maintained an outperform rating for the company, highlighting robust consumer demand and an improved financial position due to recent refinancing efforts. The company has significantly reduced its debt, with $1.8 billion now due in 2032, a substantial decrease from previous due dates in 2026 and 2028.
Stifel analysts have upgraded their price target for Norwegian Cruise Line Holdings to $35 from $32, maintaining a buy rating. The company is identified as their top large-cap cruise operator pick for 2025, based on a 2026 EBITDA estimate of $3.15 billion. Barclays (LON:BARC) also upgraded the company’s stock to overweight, increasing the price target to $32.00 from the previous $28.00, citing the company’s focus on U.S. customers and potential for stronger financial performance.
In addition to these financial developments, Norwegian Cruise Line Holdings announced executive changes and strategic initiatives to expand its luxury cruise offerings. Jason Montague has been appointed as the new Chief Luxury Officer, overseeing Oceania Cruises and Regent Seven Seas Cruises. This appointment is part of the company’s "Charting the Course" strategy, which includes a multibillion-dollar investment in fleet expansion and refurbishment.
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