Norwegian Cruise Line Shares Sink Friday: What's Happening?

Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) shares are trading lower after J.P. Morgan downgraded the stock to Underweight from Neutral and cut its price target by $2 to $11.

• Norwegian Cruise Line stock is taking a hit today. What’s pressuring NCLH stock?

J.P. Morgan Cuts Norwegian to Underweight on Flat Yield Growth and European Demand Risks

According to Investing.com, J.P. Morgan cited expectations for flat annual constant-currency yield growth and risks to the recovery in European demand from prolonged geopolitical headwinds. The firm expects Norwegian to reaffirm its annual forecast when it reports third-quarter results Thursday. Investing.com said the downgrade follows a string of target cuts that have steadily eroded sentiment on the stock. TD Cowen lowered its target to $20 from $24 on Oct. 20, Bank of America cut its target to $17 from $21 on Oct. 13, and Citi reduced its target to $19 from $22 on Oct. 2. J.P. Morgan had cut its target to $13 from $17 in late September. All of those firms kept neutral or hold-equivalent ratings.

Norwegian to Report Q3 Results Thursday with Debt and Costs in Focus

Consensus sits at Hold with an average price target near $20, according to Investing.com. Analysts have trimmed their third-quarter earnings per share estimate to roughly 91 cents, a decline of about 24% from a year earlier, while the company has guided to 90 cents. Investing.com pointed to structural concerns underlying the skepticism. Norwegian carries about $16 billion in total debt against a small cash cushion, and the stock is down about 32% this year, weighed down by elevated fuel costs tied to Middle East supply disruptions and what the company has described as execution gaps in its booking strategy.

Norwegian Shares Fall

NCLH Price Action: At the time of publication, Norwegian shares are trading 3.77% lower at $14.95, according to data from Benzinga Pro.

Image via Shutterstock