On Wednesday, Citi updated its stance on Norwegian Cruise Line Holdings (NYSE:NCLH), lifting the shares price target to $20 from the previous $19 while keeping a Neutral rating on the stock. The revision followed a notable surge in the company's shares earlier in the week, attributed to a short-covering rally after the company's earnings report.
Norwegian Cruise Line's stock experienced a significant increase, contrasting with the modest gains seen in the broader S&P market index. This uptick came despite the company's earnings and guidance aligning with market expectations. The movement was largely due to a negative sentiment prior to the release, which prompted a flurry of short-covering activity.
The company provided a strong outlook for the first quarter, but the guidance for the rest of the year suggests only a slight increase in pricing, approximately 1% when adjusted for additional occupancy benefits. Citi's projections are slightly more optimistic, assuming an average growth of 3% for the second through fourth quarters. This is based on the assumption that the robust trends seen during the industry's Wave Season will continue, potentially supporting higher pricing growth.
The analyst from Citi indicated that if the pricing growth does not meet the expected levels beyond the first quarter, the recent 20% jump in Norwegian Cruise Line's share value might face a pullback. This statement reflects a cautious outlook on the stock's near-term performance, considering the current market conditions and company guidance.
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