NEW YORK (TheStreet) -- Norwegian Cruise Line (NCLH) shares are flat in pre-market trading on Tuesday after analysts at Barclays resumed coverage on the cruise line with an "overweight" rating and $53 price target. The price target represents a potential 24% upside for the stock.
Analysts at the firm are happy with the company's acquisition of Prestige Cruises for $3 billion, which the company said was an effort to add higher end cruises to its current fleet of ships.
The company named James Montague as the COO of Prestige, which was officially bought less than two weeks ago on November 19.
TheStreet Ratings team rates NORWEGIAN CRUISE LINE HLDGS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate NORWEGIAN CRUISE LINE HLDGS (NCLH) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.5%. Since the same quarter one year prior, revenues rose by 13.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- NORWEGIAN CRUISE LINE HLDGS has improved earnings per share by 18.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NORWEGIAN CRUISE LINE HLDGS reported lower earnings of $0.47 versus $0.85 in the prior year. This year, the market expects an improvement in earnings ($2.31 versus $0.47).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Hotels, Restaurants & Leisure industry and the overall market, NORWEGIAN CRUISE LINE HLDGS's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- Even though the current debt-to-equity ratio is 1.21, it is still below the industry average, suggesting that this level of debt is acceptable within the Hotels, Restaurants & Leisure industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.06 is very low and demonstrates very weak liquidity.
- You can view the full analysis from the report here: NCLH Ratings Report