Norwegian Cruise Line Holdings
beat earnings estimates in the third quarter, propelled by strong demand, but cut its full-year outlook because of the Israel-Hamas War.
The cruise operator said it has canceled all stops in Israel as well as some stops to the surrounding region for the rest of the year. It is also canceling all visits to Israel in 2024.
Before the Oct. 7 attack by Hamas, Norwegian said 7% of its cruise trips were set to visit the Middle East in the fourth quarter. In 2024, the figure was 4%.
In early trading on Wednesday, shares of Norwegian (ticker: NCLH) were down 2.5%, to $13.26. The stock bounced around immediately after the opening bell.
Norwegian expects an adjusted loss of 15 cents a share in the current quarter, compared with the analysts’ consensus of a per-share profit of 2 cents.
For the full year, the cruise operator cut its guidance to a per-share profit of 73 cents, down from 80 cents. Analysts are expecting 78 cents, according to those surveyed by FactSet.
Bookings for trips to Hawaii are lower than expected in the current quarter because of the wildfires that consumer Maui in August. Norwegian also cited lower close-in, or short notice, demand for certain “longer, exotic” voyages.
Still, Norwegian posted adjusted earnings of 76 cents a share on record revenue of $2.5 billion. Analysts were expecting earnings of 68 cents a share on revenue of $2.5 billion, according to those surveyed by FactSet.
“We’ll call it a good news-bad news earnings release with the net impact being more negative than positive,” Truist analyst Patrick Scholes said in a note Wednesday. He has a Hold rating on the stock with a price target of $20.
The stock is 11% up so far this year, but has fallen 40% since its July peak, as of Tuesday’s close. Cruise stocks had a stellar first half of the year on an international travel boom but have fallen sharply with the end of summer and an increase in fuel prices.
Last week, Norwegian rival
Royal Caribbean
reported strong third-quarter numbers and hiked its full-year profit outlook. The cruise operator’s fuel costs were less than expected in the third quarter. Yet the beat and raise did little to significantly boost Royal Caribbean stock, which climbed 0.8% on the day.
Write to Callum Keown at callum.keown@barrons.com
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