Norwegian Cruise Line cut to Underweight by JPMorgan ahead of earnings

 JPMorgan downgraded Norwegian Cruise Line Holdings to Underweight and lowered its price target to $11 ahead of the cruise operator’s earnings next week.

For the third quarter, analyst Matthew Boss models net yields down 7.9%, in line with the Street and ahead of management’s guidance for a decline of 8.9%. He forecasts EPS of 93 cents, compared with the Street’s 90 cents. JPMorgan expects management to reaffirm its full-year 2026 forecast.

The bank’s caution centers on 2027. JPMorgan models flat constant-currency net yield growth, below the Street’s 0.8%. It forecasts a 5.3% decline in the first quarter, followed by an acceleration to 3.2% growth in the second half.

“Importantly, we see potential downside risk to our embedded 2H27 net yield acceleration with potential for prolonged geopolitical headwinds to constrain demand recapture in Europe noting ~85% of Europe itineraries for NCLH are sourced from USA based customers - the highest across our cruise coverage,” Boss wrote.

JPMorgan also believes the Street is underestimating Norwegian’s costs next year.

“On costs, we see the Street as mis-modeled for FY27 with our +1.8% NCC ex Fuel estimate (> Street +0.9%) in-line with mgmt’s target to grow expenses below the rate of inflation (defining inflation as 3-3.5% today),” the analyst said.