On March 24, Norwegian Cruise Line (NCLH) stock fell 4.9 percent and closed at $25.31. The stock was trading lower by 1.9 percent on March 25 as of 10:04 a.m. ET. This is mainly because the CDC turned down the cruise industry’s request to lift its no sail order. What’s the forecast for NCLH stock in 2021? Is it a good stock to buy or should investors stay away after the no sail order?
Norwegian Cruise Line is a leading global cruise company that operates the Oceania Cruises, Norwegian Cruise Line, and Regent Seven Seas Cruises brands. On March 25, Royal Caribbean and Carnival stocks were down 1.6 percent and 1.0 percent, respectively.
CDC keeps no sail order in 2021
On March 24, the CDC announced that the ban on U.S. cruise operations until November 1 is still in place despite pressure from cruise lines to resume operations. The no sail order was initially implemented on March 13, 2020, to help prevent the spread of the coronavirus. The order was expected to last for 30 days. Since then, the CDC has delayed the sailing for cruise ships numerous times.
On March 24, the CLIA (Cruise Lines International Association) urged the CDC to allow the resumption of cruise operations from U.S. ports in stages by July 1. The organization mentioned that the timeframe is in line with the Biden administration’s projection of getting the nation closer to normal by July 4. The CLIA also highlighted the successes of European cruise ships that have already restarted cruise ships amid the COVID-19 pandemic.
Norwegian Cruise Line's (NCLH) stock forecast
According to estimates compiled by MarketBeat, analysts' consensus target price is $22.86 for NCLH stock, which is 9.7 percent below its current price. Among the 15 analysts tracking NCLH, seven recommend a buy, seven recommend a hold, and one recommends a sell. The highest target price of $36 is 42.2 percent above the stock's current price, while the lowest target price of $13 is 48.6 percent below the stock's current price.
In March, J.P. Morgan increased its target price on NCLH stock to $36 from $33, while UBS increased it to $32 from $21. Morgan Stanley also raised its target price to $23 from $11.
Is Norwegian Cruise Line (NCLH) a good investment?
NCLH stock has more than doubled from the lows witnessed in March 2020 supported by the ongoing COVID-19 vaccination drive and hopes of a wider economic rebound by late 2021. However, the stock remains 27 percent below its 52-week high. NCLH had cash and cash equivalents of $3.3 billion at the end of 2020, which would help it survive the COVID-19 pandemic. In the fourth quarter of 2020, the company’s monthly average cash burn was around $190 million.
NCLH said that it’s witnessing strong demand for 2022. In the press release, NCLH said, “The Company is experiencing robust future demand across all brands with the overall cumulative booked position for the first half of 2022 significantly ahead of 2019’s record levels with pricing in line when excluding the dilutive impact of FCCs.” A good rebound for the cruise industry is a risk worth taking for investors.
NCLH stock doesn't pay dividends.
Currently, NCLH stock doesn’t pay dividends.
NCLH stock is a buy.
NCLH’s NTM EV-to-revenue multiple of 13.5x looks attractive compared to other cruise line operators. In comparison, Royal Caribbean has an NTM EV-to-revenue multiple of 14.4x.