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Norwegian Cruise Line Holdings Ltd NCLH

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Morningstar’s Analysis

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Domestic Summer Sail Season in Jeopardy as CDC Guidance Remains Opaque; Norwegian Fairly Valued

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

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. 

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Company Profile

Business Description

Norwegian Cruise Line is the world's third- largest cruise company by berths (at nearly 60,000), operating 28 ships across three brands (Norwegian, Oceania, and Regent Seven Seas), offering both freestyle and luxury cruising. With nine passenger vessels on order among its brands through 2027, Norwegian is growing capacity faster than its peers, expanding its brand globally. Norwegian sails to more than 450 global destinations.

7665 Corporate Center Drive
Miami, FL, 33126, Bermuda
T +1 305 436-4000
Sector Consumer Cyclical
Industry Travel Services
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2019
Stock Type
Employees 34,300