Norwegian Cruise Lines Trying To Sail Against Caribbean Headwinds

UBS analyst Robin M. Farley downgraded Norwegian Cruise Line Holdings Ltd NCLH from Buy to Neutral and lowered the firm’s price target from $54 to $42.

After conducting some channel checks, Farley noted that Norwegian was offering some seven-day Caribbean cruises for as low as $279 in Q3 and Q4, rather than using softer promotional tools to fill cabins.

“From our channel checks, NCLH seems to be under more pressure for Caribbean Q4 than other brands,” said Farley. According to the analyst, Norwegian attributes lower sales compared to competing companies to a high-supply 2016.

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A negative outlook on China also contributes to the analyst’s bearish rating. Norwegian is set to enter the China market in 2017, while Carnival and Germany-based AIDA have both pushed back brand launches to at least 2018. This indicates that a new cruise brand in China may need more support than anticipated, according to Farley.

“Our checks with China cruise sellers indicate lower price points for Norwegian since it is a new brand,” said the analyst.

At last check, Norwegian Cruise was down 1.31 percent at $37.55.

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