Transition Period Could Ding Norwegian Cruise Line's Balance Sheet

The equity was hit with a double downgrade and price-target cut

Digital Content Manager
Nov 17, 2022 at 9:26 AM
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Shares of Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) are spiraling this morning, following a double downgrade from Credit Suisse. The analyst lowered its rating to "underperform" from "outperform" and trimmed its price target by $6 to $14, noting that better value can be found in many of the cruise name's sector peers. Credit Suisse added that Norwegian Cruise Line is in a transitional state, which will likely weigh on its balance sheet.

NCLH is down 7.1% at $16.34 in premarket trading, poised to open back below the recently supportive 20-day moving average. The security has managed to keep some distance from its pandemic lows thanks to support near the $10.50 region. However, its most recent rally stopped just short of the 320-day moving average, leaving the stock at a 15.2% year-to-date deficit.

Coming into today, the brokerage bunch was mostly bullish. Of the 12 in coverage, seven said "strong buy." Meanwhile, the 12-month consensus price target of $20.81 is a 26.7% premium to last night's close. 

Options traders have taken a more bearish stance. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) 1.12 puts have been picked up for every call during the past 10 weeks. This ratios stands in the 92nd percentile of its annual range, implying long puts are much more popular than usual. 

 

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