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Norwegian Cruise Lines Is Now a Buy, Says Goldman Sachs Analyst

By Eric Volkman - Apr 20, 2021 at 9:53PM

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The company has certain key advantages over its rivals.

Has beaten-down Norwegian Cruise Line Holdings (NCLH -11.51%) stock reached a bottom? Goldman Sachs analyst Stephen Grambling believes it's got potential for a bounce; on Tuesday, the prognosticator upgraded his recommendation on the shares from neutral to buy. He also placed a $37 per-share price target on the stock, which if realized would mean a 38% increase over the most recent closing price.

As cited by Streetinsider.com, Grambling had three key reasons for his newfound bullishness. "1) industry-leading capacity growth; 2) exposure to more aspirational customers; 3) the longest liquidity runway and lowest leverage on fully recovered EBITDA."

Woman in large hat standing on a cruise ship deck, looking out to sea.

Image source: Getty Images.

This analysis comes one day after Richard Fain, CEO of Norwegian's rival Royal Caribbean Cruises (RCL -6.19%) made encouraging remarks in a video address. In what's surely an attempt to get the Centers for Disease Control (CDC) to lift its moratorium on cruises, Fain pointed out that more than 400,000 people have gone on cruises during the pandemic in countries that have allowed such voyages to resume.

"That successful experience has not only given us comfort about the safety of cruising, but it has also given us data to discuss with the CDC and other health authorities," he said. He added that the CDC is indicating that the moratorium could be lifted as soon as mid-July.

Norwegian might be carting passengers around before then, as the company has formally requested the CDC to allow it to relaunch cruises on July 4. It has pledged to implement stringent health protection measures for its crew members, including mandatory vaccinations and widespread testing.

On Tuesday, Norwegian's shares closed almost 4.4% lower, against the slight decline of the S&P 500 index on the day.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Norwegian Cruise Line Holdings Ltd. Stock Quote
Norwegian Cruise Line Holdings Ltd.
NCLH
$11.97 (-11.51%) $-1.56
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
GS
$335.36 (0.20%) $0.68
Royal Caribbean Cruises Ltd. Stock Quote
Royal Caribbean Cruises Ltd.
RCL
$37.74 (-6.19%) $-2.49

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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