Norwegian Cruise Lines Is Now a Buy, Says Goldman Sachs Analyst

Motley Fool2021-04-21
The company has certain key advantages over its rivals.

Has beaten-downNorwegian Cruise Line Holdings(NYSE:NCLH)stock reached a bottom? Goldman Sachs analyst Stephen Grambling believes it's got potential for a bounce; on Tuesday, the prognosticator upgraded his recommendation on the shares from neutral to buy. He also placed a $37 per-share price target on the stock, which if realized would mean a 38% increase over the most recent closing price.

As cited by Streetinsider.com, Grambling had three key reasons for his newfound bullishness. "1) industry-leading capacity growth; 2) exposure to more aspirational customers; 3) the longest liquidity runway and lowest leverage on fully recovered EBITDA."

This analysis comes one day after Richard Fain, CEO of Norwegian's rivalRoyal Caribbean Cruises(NYSE:RCL)made encouraging remarks in avideo address. In what's surely an attempt to get the Centers for Disease Control (CDC) to lift its moratorium on cruises, Fain pointed out that more than 400,000 people have gone on cruises during the pandemic in countries that have allowed such voyages to resume.

"That successful experience has not only given us comfort about the safety of cruising, but it has also given us data to discuss with the CDC and other health authorities," he said. He added that the CDC is indicating that the moratorium could be lifted as soon as mid-July.

Norwegian might be carting passengers around before then, as the company has formally requested the CDC to allow it torelaunch cruiseson July 4. It has pledged to implement stringent health protection measures for its crew members, including mandatory vaccinations and widespread testing.

On Tuesday, Norwegian's shares closed almost 4.4% lower, against the slight decline of theS&P 500index on the day.

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