Why Norwegian Cruise Line Stock Looks Set For A Rebound

NCLH: Norwegian Cruise Line logo
Norwegian Cruise Line

Norwegian Cruise Line stock (NYSE:NCLH) has declined by about 16% over the past month (about 21 trading days) compared to the S&P 500 which remains down by about 8% over the same period. There have been a host of developments for the stock in recent weeks.  Results from Norwegian’s rival Carnival were weaker than expected, with both revenues falling short of estimates and its net loss coming in wider than anticipated.  This is likely making investors concerned about the demand environment for cruises, as the Federal Reserve hikes interest rates and the U.S. economy sees mounting headwinds with consumer spending slowing down. That said, there have been some positive developments as well. The company has also removed all Covid-19 testing, masking, and vaccination requirements on ships of its namesake brand, indicating that the pandemic-related issues are now behind the industry. The stock has also seen upgrades by brokerages in recent weeks. Separately, the company also might be a bit better insulated against the current macro headwinds, given its focus on more affluent customers and premium cruises.

However, now that NCLH stock has seen a decline of about 16% over the last month, will it continue its downward trajectory in the near term, or is a recovery imminent? Going by historical performance, there is a roughly 68% chance of a rise in NCLH stock over the next monthOut of 177 instances in the last 10 years that NCLH stock saw a twenty-one-day decline of 16% or more, 120 of them resulted in NCLH stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 120 out of 177, or about a 68% chance of a rise in NCLH stock over the coming month, implying that the stock looks quite attractive in the near term. See our analysis on Norwegian Cruise Line Chance of A Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last ten years’ data

  • After moving 1% or more over five days, the stock rose in the next five days on 51% of the occasions.
  • After moving 15% or more over ten days, the stock rose in the next ten days on 49% of the occasions.
  • After moving -16% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 68% of the occasions.

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Returns Oct 2022
MTD [1]
YTD [1]
Total [2]
 NCLH Return 15% -37% -69%
 S&P 500 Return 0% -25% 60%
 Trefis Multi-Strategy Portfolio -2% -28% 187%

[1] Month-to-date and year-to-date as of 10/16/2022
[2] Cumulative total returns since the end of 2016

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