Norwegian Cruise stock gets new price target from Macquarie

Published 01/08/2024, 16:20
Norwegian Cruise stock gets new price target from Macquarie

Norwegian Cruise Line Holdings (NYSE: NYSE:NCLH) saw its price target raised to $24 from the previous $23 by Macquarie, while the firm reaffirmed its Outperform rating on the stock in view of the company's second-quarter performance, which surpassed both internal guidance and market expectations.

The cruise operator has been riding a wave of strong pricing and demand within the industry, which has enabled it to upgrade its full-year earnings guidance for the third time.

The expected EBITDA for the fiscal year has been increased by approximately 2% from the forecast shared at the May Investor Day.

Macquarie's analyst noted that Norwegian Cruise Line Holdings is capitalizing effectively on the prevailing market conditions. The positive execution has led to a roughly 4% increase in their target price.

Norwegian Cruise has been receiving positive attention from analysts. Macquarie and Mizuho Securities have both reaffirmed their Outperform ratings on the company, with Macquarie raising its price target from $23 to $24, and Mizuho increasing its target from $24 to $25. This follows Norwegian Cruise Line's impressive second-quarter performance, which exceeded both firms' estimates and market expectations.

The company's second-quarter earnings report showcased strong earnings before interest, taxes, depreciation, and amortization (EBITDA) of $587.7 million, surpassing Mizuho's estimate of $565.8 million and the consensus estimate of $572.8 million.

The cruise operator also reported a yield of 6.3%, outperforming Mizuho's forecast of 4.7% and the market expectation of 5.17%. Moreover, Norwegian Cruise Line managed to keep costs at 5.0%, below both Mizuho's projection of 5.8% and the street estimate of 5.6%.

The company's strong financial performance has led to the third consecutive upgrade of its full-year earnings guidance. Norwegian Cruise Line's focus on return on experience and investment has resulted in robust demand, strong pricing, and record advance ticket sales. This has contributed to an increase in net yield growth and an improved outlook for adjusted EBITDA and EPS.

InvestingPro Insights

Following the positive outlook from Macquarie, Norwegian Cruise Line Holdings (NYSE:NCLH) also shows encouraging signs in its financial metrics. With a market capitalization of approximately $7.88 billion, the company operates with a significant debt burden, which is a critical factor for investors to consider. However, Norwegian Cruise Line Holdings is expected to see net income growth this year, which is reflected in the positive revisions by three analysts for the upcoming period.

InvestingPro data indicates a P/E ratio of 18.48, which adjusts to 17.54 for the last twelve months as of Q2 2024. This is coupled with a PEG ratio of 0.13 for the same period, suggesting that the stock may be trading at a low price relative to its near-term earnings growth. Despite trading at a high Price / Book multiple of 11.39, the company’s revenue growth has been robust at 26.87% over the last twelve months as of Q2 2024.

For investors looking to delve deeper into Norwegian Cruise Line Holdings' financial health and future prospects, there are additional InvestingPro Tips available. These include insights on the company's profitability over the last twelve months and the fact that it does not pay a dividend, which may influence investment decisions. For a comprehensive analysis and more tips, interested readers can visit InvestingPro for further details (https://www.investing.com/pro/NCLH).

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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