Two weeks ago, Jefferies analysts came out very much in favor of cruise line Norwegian Cruise Line stock (NLCH), calling it ready to take on a recession. That opinion got very much underscored by analysts at Citi, who not only looked for Norwegian to take on a recession, but for the stock to potentially double from its current levels. This was good enough for investors, who sent shares up modestly in Tuesday afternoon’s trading.
Citi analyst James Hardiman, who has a four-star rating on TipRanks, kept its rating at Buy and its price target at $34. This is actually 108% above the figure posted at close of trading on Monday. Basically, Hardiman notes that investors were right to be cautious about anything discretionary, which Norwegian very much is. But Hardiman believes investors went too far in their caution, and notes that Norwegian, and the cruise industry, are “…better positioned than they have ever been for turbulent waters.”
Indeed, Hardiman noted, cruises are actually gaining ground against traditional, land-based vacations, as cruises themselves are getting a whole lot more attractive. A slowing economy, therefore, almost works in cruising’s favor, as customers look for more bang for their buck. They can find it in cruising, which is now substantially superior to the standard vacation.
Case in Point
And, as if tailor-made, we got reports that Norwegian is working to provide further improvement, by expanding the experience at Great Stirrup Cay Island. Great Stirrup Cay Island is Norwegian’s own little tropical paradise, and will be bringing new amenities to the island. The downside here is that the new goodies will not be ready to show until the fourth quarter of 2025, which may leave summer and fall travel a little in the lurch.
As for what those amenities will be, there were certainly no shortage listed. Start with a whole new pool area, including dedicated bar and a “splash zone” for the kids. A new heated pool has also been added in, as is a new welcome center and tram service to get around the island. There will even be a green park area complete with lawn games and gathering spaces, so there is no shortage of new things to see and do on Grand Stirrup Cay.
Is Norwegian Cruises a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on NCLH stock based on 10 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 5.5% loss in its share price over the past year, the average NCLH price target of $29 per share implies 75.76% upside potential.
