Shares of Norwegian Cruise Line Holdings Ltd. NCLH, -6.77% slumped 7.8% in morning trading Thursday, to make them the S&P 500’s SPX, -0.31% biggest losers on the day, after Credit Suisse swung to bearish from bullish on the cruise operator, citing valuation concerns relative to its peers. Analyst Benjamin Chaiken doubled downgraded the stock to underperform from outperform, and slashed his stock price target to $14 from $20, with the new target implying TK% downside from current levels.
“We think [Norwegian] is a quality company, that has outperformed materially [year-to-date] and we see risk to estimates/valuation versus peers,” Chaiken wrote in a note to clients. The stock has now shed 21.8% this year, while shares of Royal Caribbean Group RCL, -3.87% have dropped 24.9% and Carnival Corp. CCL, -1.25% have tumbled 53.4%. He said unless Norwegian’s recent higher-than-expected cost guidance turns out to be “materially conservative,” he believes 2023 earnings before interest, taxes, depreciation and amortization to be closer to $1.8 billion versus the company’s target of greater than $1.94 billion. That suggests Norwegian’s “valuation premium vs. peers is likely unsustainable,” Chaiken wrote.