The Norwegian Cruise Line Analyst: Robin Farley upgraded the rating for Norwegian Cruise Line from Neutral to Buy, while reducing the price target from $18 to $15.

The Norwegian Cruise Line Thesis: The company’s pre-announcement shows third-quarter occupancy at 82%, up from 65% in the previous quarter, with low-single digit growth in net revenue per cruise day and high-single digit growth in gross revenue, Farley said in the upgrade note.

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The analyst lowered the loss per share estimate for 2022 from $4.97 to $4.66 and the earnings per share estimate for 2023 from $1.44 to $1.55.

“We see NCLH as our next most preferred name due to relatively greater concentration of domestic passengers sourced and strong pricing given its higher exposure to the luxury segment,” Farley wrote.

The analyst was even more bullish on competitor Royal Caribbean Cruises Ltd (NYSE:RCL), adding that "we are more optimistic on price for 2023, which raises our RCL net yield estimate by 270bps to +2.5% vs. 2019."  Farley adjust the price target for RCL from $65 to $56.

“Given concerns about the lower end consumer in a recession, we note that NCLH has less exposure to the broader end of the market, with the Regent and Oceania brands comprising 14% of the total fleet,” he wrote.

Benzinga data shows analysts have a consensus Buy rating on NCLH. 

NCLH Price Action: Shares of Norwegian Cruise Line had risen by 8.17% to $12.58 at the time of publication Wednesday.

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