Shares of Norwegian Cruise Line are down after analysts downgraded the stock to Underperform.
RACHELLE AKUFFO: It's time for Triple Play, the three stocks we're watching in the final 30 minutes of trading. We have Norwegian Cruise Lines, Target, and Alibaba on deck and, of course, Jared Blikre joining us for this one.
Now, my pick is Norwegian Cruise Lines Holdings, ticker NCLH. Now, they're under pressure today, their stock price down, as you can see there, almost 7%. The cruise operator saw some of the S&P 500's biggest losses after a double downgrade from Credit Suisse analyst Benjamin Chaiken to Underperform from Outperform. Also saw a price target cut to $14 from $20.
Now, despite calling it a quality company that has outperformed Year To Date, the reason for that bearish turn, the, quote, "valuation premium versus peers is likely unsustainable." Now, he sees better value in some of the peers like Royal Caribbean and Carnival. And, of course, the arrival of Norwegian's new Prima Class series cruise ships also being pushed back, delays there from 2024 and 2025, respectively, to 2025 and 2026.
And, as we know, cruise stocks have been beaten up this year as demand hasn't returned to pre-pandemic levels. They also took on a lot of pandemic-fueled debt. And, of course, inflation, as we've been talking about, really has consumers being more discerning about how they travel, Seana.
SEANA SMITH: Yeah, certainly a tough setup here for a number of the cruise lines. It's interesting, when it comes to Norwegian, in terms of what the Street is expecting. There's 10 Buys, seven Holds, and only one Sell on the stock. So here we have a double downgrade, a new price target of $14, which is more than $2 lower from where it is trading today, so maybe this stock has further to fall. Like you were saying, it's more so a valuation play. They're saying the valuation premium compared to those peers likely to prove unsustainable. We'll see. It's a tough environment for all three of those leaders in the cruise line space, right now.