On Thursday, Goldman Sachs (NYSE:GS) analyst Lizzie Dove adjusted the price target for Norwegian Cruise Line Holdings (NYSE:NCLH) shares, reducing it to $18 from the previous $20. The adjustment comes as NCLH trades at $16.03, having declined 37.7% year-to-date. Despite this change, Goldman Sachs continues to recommend buying the stock, with InvestingPro data showing the shares trading at a relatively modest P/E ratio of 9.81.
In a detailed statement, the analyst expressed surprise at the company’s decision to lower its net yield guidance, which contrasted with Royal Caribbean ’s (NYSE:RCL) recent move to raise its forecast and share positive data for April. This discrepancy raised questions about whether the issues were specific to Norwegian Cruise Line or indicative of a broader slowdown in the cruise industry or consumer spending that Royal Caribbean has not yet encountered. InvestingPro data reveals that 5 analysts have recently revised their earnings expectations downward, with current analyst targets ranging from $17 to $38.
The analyst noted that Norwegian Cruise Line’s challenges, such as more modest growth in the luxury segment and earlier occupancy reductions, predate the current economic volatility. The company is also facing difficult comparisons due to strong bookings in the previous year. Furthermore, there has been significant discussion about the company’s cost-saving measures, including itinerary changes and the removal of some premium food offerings, which have been more pronounced than those of its peers. According to InvestingPro data, the company maintains a moderate debt level with revenue growing at 5.57%, though its current ratio of 0.19 indicates potential liquidity concerns.Want deeper insights? Get exclusive access to NCLH’s comprehensive Pro Research Report, along with 10+ additional ProTips and advanced financial metrics through an InvestingPro subscription.
Despite these concerns, Norwegian Cruise Line’s expectations for net revenue per passenger day (net per diems) remain competitive, with a 4% target for the second half of the year. However, the slowing pace of advanced ticket sales, even with increased capacity, suggests that the yield outlook might not be fully secure.
Goldman Sachs’ analysis concludes with a valuation below Norwegian Cruise Line’s projected net yield for 2025. Nevertheless, the current market price is believed to reflect more downside risk than Goldman Sachs anticipates in their estimates for 2026. Therefore, the firm maintains its Buy rating while acknowledging the lowered price target.
In other recent news, Norwegian Cruise Line Holdings reported its first-quarter earnings for 2025, revealing a slight miss on both earnings per share (EPS) and revenue compared to forecasts. The company posted an adjusted EPS of $0.07, which fell short of the expected $0.09, while revenue reached $2.13 billion, just under the forecasted $2.15 billion. Despite these challenges, Norwegian Cruise Line exceeded its adjusted EBITDA guidance, reporting $453 million, and demonstrated resilience through improved net yields and strong future bookings. The earnings miss was largely attributed to a $0.05 foreign exchange headwind. Looking forward, Norwegian Cruise Line maintains its full-year adjusted EBITDA guidance of $2.72 billion and expects net yield growth of 2-3%. The company also announced the delivery of its new ship, Norwegian Aqua, and enhancements at Great Stirrup Cay, which are expected to drive higher guest satisfaction and incremental yields. Additionally, Norwegian Cruise Line is focused on targeted cost management and disciplined pricing strategies to navigate the current environment.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.