Norwegian Earnings: Demand Momentum Set to Continue Into 2025, Leading to Further Profit Expansion

Narrow-moat Norwegian delivered robust third-quarter performance and a lifted full-year outlook, sending shares up around 10% on Oct. 31. The firm echoed similar rhetoric to narrow-moat peers Carnival and Royal Caribbean that consumer appetite for cruising has not abated. As evidence, Norwegian printed third-quarter-as-reported net revenue yield growth of 8.7%, 260 basis points ahead of our forecast, as pricing and onboard spend were better than expected. This led the firm to lift its 2024 yield outlook by 130 basis points, to 9.5%, indicating pricing momentum is set to continue into its final quarter, which should be up 7%. With pricing and load for 2025 in line or above 2024 levels for all four quarters, we think Norwegian should be well set to capture around 3% yield growth in 2025, which would generate net revenue yields above the $300 per day level, another high-water mark. If cruise operators continue to price rationally, we think this is a rate all three companies on our coverage list will trend to in 2025, with upside potential stemming from further outperformance of onboard demand.