Norwegian (NCLH) Extends Voyage Suspension to Meet CDC Guidelines

In a bid to meet the guidelines issued by the U.S. Centers for Disease Control and Prevention (CDC), Norwegian Cruise Line Holdings Ltd. NCLH recently announced extension of voyage suspension for its Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands till Apr 30, 2021. Earlier, the company suspended all cruises through Feb. 28 and select cruises through March 31.

The company stated that its association with global government, public health authorities and Healthy Sail Panel expert advisors are likely to continue to ensure necessary measures to protect its guests, crew and the communities visited.

However, for cancelled cruises, guests are likely to be notified through travel advisors.

Increased Focus on Counter Measures

During the third-quarter 2020, the company collaborated with Royal Caribbean Cruises Ltd. RCL to form the “Healthy Sail Panel”. The panel provided 74 specific recommendations (that includes a combination of science-backed protocols and procedures) to help reduce any risk out of the coronavirus pandemic. This includes COVID-19 testing of all guests and crew, application of face masks, physical distancing requirements and controlled shore excursions.

Going forward, the company anticipates that the cumulative effect of testing coupled with other protection measures at different phases of the cruise journey will significantly mitigate the risk. Also, it intends to continuously evaluate, refine and improve upon these protocols to offer a safe sailing.

Price Performance

Shares of Norwegian have surged 68.9% in the past six months compared with the industry’s 35.9% growth. Although, the cruise industry is witnessing dismal demand for cruise due to coronavirus-induced shutdowns, the company’s load factor for second half of 2021 and 2022 are within the company’s historical range. This along with initiatives to expand its fleet size are encouraging. Meanwhile, earnings estimates for 2021 have moved up in the past 30 days depicting analysts’ optimism regarding the stocks’ growth potential.

Zacks Rank & Key Pick

Norwegian — which shares space with Carnival Corporation & Plc CCL in the Zacks Leisure and Recreation Services industry — has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked stock in the same space is Cedar Fair, L.P. FUN, which carries a Zacks Rank #2 (Buy).

Cedar Fair’s 2021 earnings are expected to surge 77.1%.

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