Norwegian Cruise rating cut at Argus on slowing economy, weakening consumer spend
Investing.com -- Argus downgraded Norwegian Cruise Line (NYSE:NCLH) Holdings to Hold from Buy on Wednesday, citing a slowdown in advance bookings and reduced fares in its Oceania brand amid growing concerns over weakening consumer spending and a softening economy.
“Given the company’s highly leveraged position, we think the current share price adequately reflects Norwegian Cruise Lines’ vulnerability to weakening consumer spending and a slowing economy,” Argus analysts wrote in a note.
The firm also trimmed its earnings forecasts, lowering its 2025 estimate to $2.06 per share from $2.20 and its 2026 estimate to $2.50 per share from $2.60.
Argus pointed to reduced fares for the premium Oceania brand and a general decline in forward bookings as signs of fading demand.
Despite the downgrade, the firm maintained its more optimistic long-term view on the stock.
“Based on prospects for resilient demand for cruises over the next five years and an 8% capacity increase in 1Q24, our long-term rating is BUY,” the note said.
The downgrade on a 12-month basis is said to reflect growing investor concerns that travel demand, especially for discretionary categories like cruises, may falter in a weakening macro environment.
Argus also noted that Norwegian Cruise Line shares have declined 30% year-to-date, compared to a 12% decline for the XLY, an ETF that tracks the Consumer Discretionary sector.
