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Norwegian Cruise Line Holdings Ltd NCLH Stock Quote

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Morningstar‘s Stock Analysis NCLH

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Is it the right time to buy or sell?
Is it the right time to buy or sell?

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Norwegian Remains on Track for Strong 2023, Bolstered by Robust Pricing Strategies

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

We don’t plan any change to our $28 fair value for no-moat Norwegian Cruise Lines after absorbing its investor meeting update and view shares as significantly undervalued. In fact, after lapping the slower return to profitability that no-moat Carnival reported last week (the firm generated around $300 million in EBITDA in its third quarter versus $2.4 billion in third-quarter 2019), we are more constructive on Norwegian shares given management’s rhetoric. Not only are bookings in line with 2019 levels (at 245 days before sail) with pricing “meaningfully higher,” but EBITDA is also slated to reach record levels in 2023 (a promise Carnival couldn’t confirm). A unique positioning offers Norwegian the ability to keep its price leadership position in the cruise industry, thanks to robust capacity growth (with premium pricing on new hardware), rich cabin mix (60% balconies), greater quantity of upscale berths (nearly 3 times Royal Caribbean), and a disciplined market-to-fill strategy (rather than discount). Additionally, with future cruise credits stemming from COVID-19 cancellations expiring in December 2022, next year’s pricing should be liberated from any drag from relocated bookings.

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Key Statistics NCLH

Company Profile NCLH

Business Description

Norwegian Cruise Line is the world's third-largest cruise company by berths (at more than 62,000), operating 29 ships across three brands (Norwegian, Oceania, and Regent Seven Seas), offering both freestyle and luxury cruising. The company has redeployed its entire fleet as of May 2022. With eight passenger vessels on order among its brands through 2027 (representing 20,000 incremental berths), Norwegian is increasing capacity faster than its peers, expanding its brand globally. Norwegian sailed to around 500 global destinations before the pandemic.

7665 Corporate Center Drive
Miami, FL, 33126
T +1 305 436-4000
Industry Travel Services
Most Recent Earnings Jun 30, 2022
Fiscal Year End Dec 31, 2022
Employees 34,700

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