Norwegian Cruise Line stock price target lowered to $21 by Susquehanna

Investing.com - Susquehanna lowered its price target on Norwegian Cruise Line Holdings (NYSE:NCLH) to $21.00 from $25.00 while maintaining a Neutral rating on the stock. The new target aligns closely with InvestingPro’s Fair Value assessment, suggesting the stock may be slightly undervalued at its current price of $18.82.

The firm cited concerns about Norwegian’s occupancy and yield dynamics for fiscal years 2026-2027, noting uncertainty as the company faces a growing base of total capacity. Specifically, the Caribbean capacity is expected to increase by approximately 10 percentage points in fiscal year 2026. These concerns appear reflected in analyst sentiment, with InvestingPro data showing 8 analysts have recently revised their earnings expectations downward for the upcoming period.

Susquehanna also highlighted elevated industry supply within the Caribbean region, where Royal Caribbean leads in brand awareness for family-oriented and theme park-like experiences, such as its Icon-class ships paired with CocoCay destination. With a high beta of 2.1, NCLH stock has shown significant volatility in response to industry developments.

The research firm acknowledged Norwegian Cruise Line continues to make progress with its "Charting the Course" initiative but expressed concern about potential negative mix issues that could persist with the capacity increases. Despite these challenges, NCLH maintains a "GOOD" overall financial health score according to InvestingPro metrics, though its debt burden of $15.3 billion remains substantial.

Susquehanna indicated it sees better risk/reward profiles in Norwegian’s peers Royal Caribbean and Carnival, which are expected to deliver low-double-digit adjusted EBITDA growth and solid free cash flow through fiscal year 2027. While NCLH is profitable with $2.54 billion in EBITDA over the last twelve months, its negative free cash flow yield of -12% may explain the preference for its competitors. Discover more insights with InvestingPro, which offers 11 additional ProTips and a comprehensive research report on NCLH.

In other recent news, Norwegian Cruise Line Holdings reported its third-quarter earnings for 2025, revealing mixed results. The company achieved an earnings per share of $1.20, exceeding the forecast of $1.16, which represents a 3.45% positive surprise. However, revenue did not meet expectations, totaling $2.94 billion against the anticipated $3.03 billion, a 2.97% shortfall. Additionally, Norwegian Cruise Line revised its fourth-quarter yield guidance downward, contributing to the cautious outlook. In response, Stifel lowered its price target for the company to $32.00, maintaining a Buy rating. Similarly, Goldman Sachs reduced its price target to $27.00, also keeping a Buy rating. Analysts noted that the company failed to surpass third-quarter net yield expectations, impacting investor sentiment. These developments come amid concerns over Caribbean operations and a broader trend of cruise operators not meeting expected results.

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