Why Norwegian Cruise Lines grew 12.3% in March
Shares of Norwegian cruise lines (NYSE: NCLH) rose 12.3% in March, according to data from S&P Global Market Intelligence.
Norwegian Cruise Lines rebounded from a tough February when profit numbers beat analysts’ expectations and Russia’s invasion of Ukraine raised fears of a drop in international travel.
Still, in March, one of Norwegian’s cruise lines posted strong bookings, the CDC further eased cautious recommendations for cruises as the omicron variant slipped, and two analysts improved the stock.
On March 7, Norwegian announced that its 2024 Around the world in 180 days travel on its Oceania Cruise line sold out within 30 minutes of ticket availability. It was a single-day booking record for Norwegian, surpassing a previous record set last September. Strong bookings were another data point that despite high inflation and worries about the economy, cruise demand still looks very, very strong.
A few days later, Norwegian introduced nine new food and beverage concepts for its new prima class ships. Pop star Katy Perry has also been named the Norwegian’s ‘godmother’ prima ship and was on hand to celebrate the ship’s christening in Iceland.
Also helping sentiment in March: The Centers for Disease Control finally officially lifted its travel health advisory for cruise ships towards the end of the month, as the omicron variant gradually receded.
Perhaps these new corporate announcements and the easing of COVID restrictions have led to increased enthusiasm for the stock. In the middle of the month, analysts from Morgan Stanley (NYSE:MS) upgraded the stock from “neutral” to “underweight”. Analyst Tim Allen said in his note: “We believe NCLH is better positioned in the current recovery than RCL/CCL due to its higher customer bias, smaller fleet, greater oil coverage and higher premium market risk (especially Alaska).”
Positive sentiment for Norwegian also extended to analyst Daniel Politzer at Wells Fargo (NYSE: WFC), which launched the company at “Buy,” with a price target of $27. He is also a fan of Norwegian’s smaller but newer fleet, which could have greater pricing power in an inflationary environment.
While investors expected cruise lines to make a strong comeback last year, the delta and omicron variants delayed their comeback. Now that oil prices are skyrocketing, interested investors need to be more selective about which companies have the ability to raise prices.
Of the three major listed cruise lines, this one appears to be Norwegian. At least two analysts agree that it is their favorite in the sector.
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