Cruise giant Norwegian upgraded as demand holds up and potential for Russia ‘gold mine’ looms

JP Morgan has upgraded the shares of Norwegian Cruise Line Holdings after the operator’s New York-listed shares lost 27% in the last month alone.

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Analysts led by Matthew Boss boosted their rating to “overweight” from “neutral” — citing the share price plunge despite unchanged demand indicators and the prospect of a reopening of the Russia cruise market.

Boss kept his price target for the company — whose flagship brand is Norwegian Cruise Line — at $30 per share.

But for shares that plummeted to $19.19 on Friday from a peak of $28.35 at the end of January, the unchanged target represents a 56% premium on the last closing price, offering a buying opportunity if JP Morgan’s projection holds true.

After the upgrade, Norwegian’s shares gained 4.4% on Monday to reach $20.04 in late-morning trading.

Boss’ note came after JP Morgan hosted key Norwegian executives at a conference in Las Vegas, where chief financial officer Mark Kempa said the company was deliberately cautious when it gave its 2025 guidance in late February because of “noise” in the geopolitical and macroeconomic backdrop.

“Kempa cited the fundamental backdrop for the industry remains strong, and they have not seen any impact from the recent market volatility,” the analyst said.

Last month, Norwegian forecast a yield-to-cost spread of 1.7% for 2025, below analyst expectations of 2.5%. The metric is a measure of per-passenger revenue against operating costs.

Boss wrote in a note to clients that, despite the cautious outlook, Norwegian has not seen any change to key indicators, and luxury brands Regent Seven Seas and Oceania Cruises were seeing demand trends that are “well intact”.

“Management sees a notable opportunity to improve bottom-line execution,” the analyst said of the luxury lines.

Boss also highlighted an upside possibility that may benefit Norwegian more than its competitors.

“Kempa cited a potential ‘boom’ that would come in a scenario of a Russia/Ukraine truce for the cruise industry with the Baltic characterised as the ‘gold mine’ of the cruise industry with some of the highest yielding itineraries in the world,” Boss said.

Norwegian has 11 ships deployed in Northern Europe.(Copyright)