A Wedbush Securities analyst became the second stock picker this month to downgrade a previously bullish rating on Norwegian Cruise Line's shares as concerns grow over market weakness in the sector.
James Hardiman, who tracks leisure stocks for the investment bank, cut his rating to "neutral" from "outperform" Friday, while chopping his price target to $45 from $53.
The analyst also reduced his earnings estimates for rival Royal Caribbean Cruises, according to various financial websites.
Pricing analysis
Hardiman tied the decisions to Wedbush's own pricing analysis, which encountered negative signs for the cruise sector.
"While the reasons for and, by extension, the duration of this weakness remain somewhat murky, it is difficult to ignore the current trends not only impacting the European cruise market but also the Caribbean market, previously the model of stability," he wrote, according to StreetInsider.
Hardiman is not alone in expressing concerns about pricing in the cruise market.
Last week, analyst Robin Farley of UBS chopped her rating of Norwegian's shares to "neutral" from "buy".
Guidance risk?
She said pricing signals point put the Miami company's earnings guidance at risk.
"Our channel checks find some price offers as low as $279 for seven-day Caribbean cruises in late third quarter and for the fourth quarter, with [Norwegian] using price cuts, not just promotional tools like non-cash value-adds."
Norwegian's New York-listed shares have fallen to $37.79 since their 52-week peak of $63.27 peak in October of last year, but they have recovered from a low of $34.16 touched last month.
