Norwegian Cruise Line could be the most reliable cruise stock during a broader economic slowdown, according to Jefferies. Analyst David Katz initiating coverage of the cruise line operator with a buy rating and $25 price target, which implies shares could jump 30.5%. Although Norwegian Cruise Line is the smaller operator of its peers, Katz added that the company trades at a premium valuation against its peers, and could also “weather downside in the macro better than most.” “As the fourth largest cruise line in the world (behind CCL, RCL, and MSC), there is a lot to like about NCLH,” Katz wrote. “While NCLH’s current ~5.4x leverage is elevated, strong FCF covers planned growth CAPEX, while growing EBITDA drives meaningful de-levering. NCLH also trades at the largest discount both on multiple and absolute price to its pre-COVID avg. vs. its peers, which we expect to narrow on continued execution.” NCLH 1Y mountain NCLH stock performance. Katz’s analysis on historical trends indicates that Norwegian Cruise Line’s revenue per passenger remained positive in both 2015 and 2016 amid the broader macroeconomic slowdown given its premium focused brands, while competitors Carnival and Royal Caribbean saw their revenue per passenger fall on average by about 3% year-over-year. Given this, his estimates on fiscal year 2025 and 2026 slowdown scenarios are more tame on Norwegian Cruise Line compared to its peers. To be sure, fiscal year 2025 results from Katz’s stress test “had far less sensitivity than FY26, given the advance booking nature of the cruises.” Other catalysts for Norwegian Cruise Line shares are the company’s relatively new CEO pushing cost efficiency and its strong free cash flow and valuation, according to the analyst. The stock has fallen 25.6% this year on concerns about a tough macroeconomic environment affecting demand and the impact of potential tax hikes on the cruise industry. Most analysts are bullish on Norwegian. Of the 23 who cover it, 15 have a buy or strong buy rating, according to LSEG. The remaining eight rate the stock as a hold. Katz also initiated rival Carnival as a buy. “We are bullish on the whole sector due to compelling demand from the trade-down value-travel tailwind and constrained industry supply growth through 2030,” Katz said in a note to clients. “Ancillary spending trends, land-based amenity additions, and overall execution opportunities enhance our bullishness.” Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
