Norwegian Cruise Line Holdings (NCLH -7.49%), once one of the three riders of the cruise line apocalypse, is starting to look healthy again -- and Wall Street has noticed. On Monday, Norwegian unveiled a new "charting the course" strategy, raised guidance for 2024, and gave a new forecast for how it will grow through 2026.
How good was Norwegian's news? Good enough that Stifel analyst Steven Wieczynski raised his price target on Norwegian stock to $26 per share, predicting a 58% stock bump in a year.
Is Norwegian Cruise stock a buy?
Why does he think this?
Citing strong demand for cruise services and an improved outlook for the cruise industry, Norwegian predicts its net yield, i.e., revenue minus direct costs, will grow 7.2% this year, while adjusted earnings will more than double to $1.42 per share. Wall Street is only expecting $1.40. Longer term, Norwegian forecasts earnings will grow another 72.5% through 2026, to $2.45 per share, yielding annualized earnings growth of 30% over the next three years.
So what does this mean for investors?
Well, not to put too fine a point on it, but it kind of makes Norwegian Cruise stock look like a screaming buy. Consider: Since returning to profitability last year, Norwegian's profits have already grown to the point where its stock costs only 21 times earnings. That's going to look incredibly cheap if Norwegian delivers on its promise to grow earnings 30% per year over the next three years. Nearer-term, it could look like a steal of a deal if Norwegian succeeds in doubling its 2023 earnings by the end of this year.
Admittedly, I'd feel a whole lot more confident about recommending the stock if Norwegian wasn't carrying around a net debt load of $14 billion. I'm really not a fan of investing in debt-laden companies. But if Norwegian can deliver on its promises and keep chipping away at its debt load, this stock really could be a long-term winner.
