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Shares Norwegian Cruise Line Holdings Ltd. New York Stock Exchange: NCLH Since August I have been on an absolute heater. After a lackluster first half, in which shares traded in a tight range with no clear direction, they are up nearly 90% in the past four months. As the tourism industry prepares for a strong 2025, the conditions are in place for a strong end to the year for Norwegian cruise line investors.

The Miami-headquartered cruise line operator is working diligently to restore pre-pandemic performance levels, both operationally and financially. While things haven’t been smooth sailing, the company’s recent performance and prospects give investors plenty to be excited about. Let’s jump in and see why.

Fundamental Performance

Let’s start with the company’s fundamentals, which are trending in the right direction. While the company’s earnings reports have been mixed this year, its latest report in late October was impressive.

The company exceeded expectations, beating both revenue and profit. Notably, this was record revenue, surpassing even the best years before the pandemic, and marking Norway’s most profitable quarter in recent memory.

For these reasons alone, this stock is worth keeping a close eye on, as few other companies have managed such a dramatic recovery. With this fundamental momentum, the Norwegian company will be in a strong position heading into 2025.

Bullish Analyst News

It’s also worth noting that analysts are bullish on the Norwegian cruise line’s prospects, with several upgrades in recent weeks. Just this week, the Goldman Sachs team upgraded the stock to Buy as they noted some multi-year tailwinds that will significantly benefit the Norwegian cruise line.

First, expected growth in demand for travel, especially cruises, is projected to outpace growth in supply. This trend is already evident in the annual increase in the number of new customers taking cruises, as reported by some of the Norwegian company’s competitors.

Second, the introduction of new ships and favorable changes in fleet composition are expected to increase pricing power through a “halo effect” that encourages premium orders.

Third, Goldman Sachs pointed to structural improvements in Norway’s earnings management strategy. These include fewer unsold cabins, less reliance on last-minute discounts and initiatives to encourage passengers to spend earlier on board.

Their bullish stance echoes that of Truist Financial earlier this month, which also rated the stock a Buy. Both teams set a $35 price target for Norwegian shares, which, based on last night’s closing price, indicates a target upside of almost 30%.

Potential problems

Despite strong momentum and bullish analyst forecasts, the Norwegian cruise line still faces some headwinds that investors should be aware of. First, the company needs to break out of the $35 range where it has previously struggled, especially in 2021’s post-pandemic highs.

If the Norwegian company fails to rise from this level, despite record revenues and bullish tailwinds, concerns will grow over the stock’s ability to maintain its upward trajectory.

There is also the unresolved question of sustainable profitability. While the company’s revenue growth is undeniable, Norge has yet to prove its ability to achieve consistently profitable quarters. Declining earnings per share at the start of the year are a reminder of this problem, and the company will need to start 2025 strong to convince investors it can maintain its momentum.

Participation

However, these problems should be more than manageable. Even from a technical point of view, the Norwegian’s attitude looks increasingly optimistic. The stock’s Relative Strength Index (RSI) is currently at 57, indicating that the stock has strong momentum but still has plenty of room for growth.

Combine this with the overall market’s strong performance and improving consumer spending trends, and you can’t help but feel like the travel industry is definitely a space worth getting involved in.

Investors should pay attention to Norwegian shares in particular to continue building on their recent gains, especially given improving fundamentals and bullish analyst forecasts. There are several reasons why investors should be worried, and as we head into the final few weeks of the year, the Norwegian cruise line could offer the perfect opportunity for those ready to jump on board.

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