Norwegian Cruise report likely to affirm concerns, says Morgan Stanley

Morgan Stanley analyst Stephen Grambling says results Norwegian Cruise Line’s (NCLH) Q1 results are likely to affirm concerns over the consumer spending and broader economic backdrop with its forward bookings “eroding,” driving lower net yield guidance. While Norwegian trades at a “seemingly undemanding” 8.5-times the updated earnings guidance, the company’s operating and financial leverage “exacerbate downside if trends deteriorate,” the analyst tells investors in a research note. Moreover, Morgan Stanley believes the “dichotomy” in Norwegian’s bookings and yield trends versus competitors could point to the company’s cost cuts as being a culprit for deteriorating demand, particularly in the higher end brands. The firm has a Market Perform rating on the shares.