Norwegian Cruise Line Holdings Ltd NCLH

We don’t plan any material change to our $27 fair value estimate for no-moat Norwegian after incorporating first-quarter results and view shares as fairly valued. With no hardware deployed and therefore no passengers carried in the period, performance was largely predicated on the firm’s ability to control costs, with Norwegian ultimately delivering an adjusted EPS loss of $2.03. While hopes of a domestic restart for the summer continue to slip away (given the slow response time from the CDC), European and Caribbean ports are providing a segue for a global restart to begin in earnest in July. And rhetoric surrounding demand indicates that a restart is likely to bode well for Norwegian, given that first-quarter bookings were more than double the level of the preceding quarter. Looking further out, Norwegian noted the first half of 2022 was booked ahead of 2019 levels at higher prices when excluding future cruise credits. Although pent-up demand should offer a long runway for cruisers, we remain concerned that dislocated costs to redeploy the fleet could stymie the return to profitability.