Norwegian Cruise Line Holdings has been given a lift in part due to firmness found in the luxury sector.
Sanford C. Bernstein Research has upgraded the New York-listed company's shares to outperform from market-perform while assigning a target price of $57 to the stock, which hit $43.80 midday.
The company poses "less perceived risk" because its recent operational and strategic performance has lessened concerns around Norwegian's smaller size and operational volatility.
"We also have a greater appreciation for some of the company's unique pricing initiatives, which we believe constitute a competitive advantage," analyst David Beckel wrote today in a note to clients.
He also said Norwegian is well positioned for "uncertain times," thanks to high exposure to the luxury market, which books out further than other segments, and North American concentration.
The company today announced a €1.15bn ($1.46bn) order for two ships from Fincantieri for luxury brand Oceania Cruises.
The company has a more "shareholder-friendly" financial profile, which should raise stock value, and sponsor overhang from Apollo Global Management's and Genting's $962m December exit has evaporated, he said.
"Norwegian's growing pool of free cash flow will be used to continue buying back stock while likely initiating a dividend in 2019," he said.
Beckel's note was an accompaniment to Bernstein's 2019 preview for the cruise industry, released today, in which he rated all cruiselines at outperform.
He also said that the cruise sector offers a better investor risk-reward profile than the hotel industry.
