JPMorgan Assumes Norwegian Cruise Line Holdings (NCLH) at Overweight
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JPMorgan analyst Daniel Adam assumes coverage on Norwegian Cruise Line Holdings (NYSE: NCLH) with a Overweight rating and a price target of $30.00.
The analyst comments "We are sticking with our Overweight rating on NCLH, which is our top pick in the cruise sector. Our positive outlook for NCLH reflects the company’s (1) disciplined market-to-fill (as opposed to discount-to-fill) pricing strategy; (2) outsized growth potential versus peers, as NCLH has a smaller, nimbler, and younger fleet with premium pricing; and (3) attractive relative valuation — particularly using estimates two or more years out. In terms of size, NCLH commands only ~9% of the global cruise market. Accordingly, while it lacks the same scale benefits enjoyed by larger peers (CCL at ~38% capacity share and RCL at ~18%), NCLH has a greater opportunity for growth, which we consider a positive against the backdrop of strong pent-up leisure travel demand and the attractive value proposition that cruise lines offer versus land-based vacation alternatives. Additionally, our latest checks indicate NCLH has the most forward pricing momentum of the three publicly-traded players, and Norwegian’s latest addition, the Prima, appears to be garnering the biggest premium relative to its existing fleet."
Shares of Norwegian Cruise Line Holdings closed at $16.21 yesterday.
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