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Why Is Norwegian Cruise Stock Falling Today?

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Norwegian Cruise Line Holdings (NASDAQ:NCLH) stock fell in the pre-market trading session today. Shares of the cruise operator fell 10% in today’s trading session at 7:47 AM ET. The stock fell due to fears about the second wave of COVID-19 cases as economies reopen.

According to a CNBC report, “The meltup may need to take a break, as sentiment has turned too bullish too rapidly.” The report added, “Now that reopening is happening, there’s fear of suboptimal results: less social distancing triggering a second wave of the virus, followed by another round of lockdowns.”

Growth projection for Norwegian Cruise

In the first quarter, Norwegian Cruise reported a non-GAAP EPS of -$0.99 compared to $0.83 in the first quarter of 2019. The earnings missed analysts’ consensus estimate of -$0.50 per share. Norwegian Cruise generated sales of $1.25 billion—a reduction of 11.2% from the first quarter of 2019. The company met analysts’ consensus revenue estimate of $1.25 billion.

Wall Street analysts expect Norwegian Cruise to post sales of $27.11 million in the second quarter of 2020. The figure would mark a fall of 98.4% YoY compared to $1.66 billion in the second quarter of 2019. Also, analysts expect the company to post an adjusted EPS of -$2.17 in the second quarter of 2020 compared to $1.30 in the same period last year. Currently, analysts expect -71.9% and 135.9% growth in the company’s 2020 and 2021 revenues, respectively. Meanwhile, they expect an adjusted EPS of -$6.36 and -$1.90 in 2020 and 2021, respectively.

Analysts’ recommendations and target price

As of June 12, 19 analysts cover Norwegian Cruise stock. Among the analysts, 11 recommend a “buy,” seven recommend a “hold,” and one recommends a “sell.” Analysts have an average target price of $17.04 on Norwegian Cruise. The target price implies a return of -16.9% based on the closing price of $20.50 on June 12. The consensus target price for the stock has fallen from $20.42 in May—a fall of 16.6%.

Last week, J.P. Morgan analyst Brandt Montour increased its target price on Norwegian Cruise stock from $18 to 24 and maintained an “overweight” rating. According to a report from TheFly, “The analyst, however, now believes the shares are reflecting a reasonable, albeit slow, recovery in operations. While he remains constructive longer term that the industry will recover, in the near term he expects shares to remain choppy and range-bound until investors receive more clarity on several pressure points, including sailing requirements from the CDC, firm restart dates, and signs that new cruisers and older passengers will reengage with the product.”

Stock returns

Norwegian Cruise stock has returned -61.9% in the last 12 months and 84.9% in the last month. The stock is trading 191.6% above its 52-week low of $7.03 and 65.7% below its 52-week high of $59.78.

On June 12, Norwegian Cruise stock was trading 18.4% above its 20-day moving average of $17.32. Meanwhile, the stock is trading 46.3% above its 50-day moving average of $14.01 and 16.3% below its 100-day moving average of $24.50. The stock’s 14-day relative strength index score of 57 suggests that it isn’t oversold or overbought.

At 8:46 AM ET today, Carnival (NYSE:CCL) and Royal Caribbean Cruises (NYSE:RCL) stocks fell 8.9% and 8.8%, respectively. Carnival and Royal Caribbean’s target prices suggest potential returns of -7.5% and 6.5%, respectively.

Meanwhile, the S&P 500 futures declined 1.84%, while the Dow futures declined 2.17%.

Read Buy Norwegian Cruise Stock before Vacationing Restarts and Can You Still Get a Piece of Norwegian Cruise Line Stock? to learn more.

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