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Investing.com - UBS raised its price target on Norwegian Cruise Line Holdings (NYSE:NCLH) to $27.00 from $23.00 while maintaining a Neutral rating on the stock. The cruise operator, currently trading at $24.64 with a market capitalization of $11.2 billion, shows a relatively low P/E ratio compared to its near-term earnings growth potential, according to InvestingPro data.
The investment firm increased its fiscal year 2025 yield estimate by 15 basis points to 2.15% in constant currency, though this remains below Norwegian’s guidance of 2.5%. UBS expressed caution about achieving the company’s target, noting potential challenges in delivering upside to fourth-quarter yields following what it described as a challenging third quarter. InvestingPro analysis reveals that seven analysts have recently revised their earnings expectations downward for the upcoming period.
UBS highlighted that Norwegian’s second-quarter net cruise costs excluding fuel performed 100 basis points better than guidance of 1% due to expense shifts into the second half of the year. The firm’s full-year estimate for these costs improved by 20 basis points to 0.7% year-over-year in constant currency.
The research note mentioned that Norwegian Cruise Line has begun adding back the foreign exchange impact of its euro-denominated debt to adjusted earnings per share, and restated its first-quarter adjusted EPS to reflect this change. This comes as the company operates with a significant debt burden, with a debt-to-equity ratio of 9.3x as revealed by InvestingPro’s comprehensive financial health analysis, which includes over 30 key metrics and real-time Fair Value calculations.
UBS raised its fiscal year 2025 earnings per share estimate by 2 cents to $1.99, which remains below Norwegian’s guidance of $2.05, and continues to value the company using a 12-14x multiple on 2027 estimated earnings while reducing its discount period from 0.75 to 0.50.
In other recent news, Norwegian Cruise Line Holdings reported its second quarter 2025 earnings, showing a slight miss on both earnings per share (EPS) and revenue compared to analyst forecasts. The company posted an EPS of $0.51, just below the anticipated $0.52, while revenue reached $2.52 billion, falling short of the expected $2.56 billion. Despite these misses, the company’s stock experienced a significant surge, reflecting strong investor confidence. This positive market reaction seems to be driven by Norwegian Cruise Line’s record financial performance and strategic plans for future growth. The developments highlight the company’s resilience and its ongoing efforts to enhance its market position. Investors appear optimistic about the company’s direction, despite the earnings and revenue shortfall. These recent developments underscore the dynamic nature of Norwegian Cruise Line’s business environment.
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