On Wednesday, Susquehanna maintained a neutral stance on Norwegian Cruise Line Holdings (NYSE:NCLH) but increased the price target to $21 from the previous $20. The firm highlighted the cruise operator's intense focus on cost reduction, as evidenced by their fiscal year 2024 unit cost guidance, which excludes the impact of dry-dock days.
The analyst noted anticipation for a detailed update on Norwegian Cruise Line's enterprise plan, expected to be unveiled at their investor day in May. There is curiosity about whether the company can continue to find opportunities to reduce legacy costs.
The examples provided over the past approximately 18 months, such as fewer room turndowns, labor reductions, menu re-engineering, and improved fuel efficiency, raise questions about the extent of cost-cutting that can be achieved without negatively affecting the brand's value.
Norwegian Cruise Line reported a fourth-quarter adjusted earnings per share (EPS) of $(0.18), which did not meet the analyst's estimate of $(0.15), the consensus of $(0.12), nor the December guidance of $(0.15). The company's adjusted EBITDA of around $360 million for the quarter was consistent with the guidance provided in December.
The weaker than expected revenue, with the December net per diem guide forecasting a 15-16% year-over-year increase versus the actual reported increase of 14%, and higher than anticipated other income/expense due to foreign exchange were the primary factors contributing to the EPS shortfall compared to the analyst's model.
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