Cruisers are back on the water after being restricted amid the world’s reaction to COVID-19. And that’s giving new life to cruise stocks like Norwegian Cruise Line (NYSE:NCLH). However, Norwegian is down slightly in Wednesday afternoon’s trading, and it’s mostly because of a plan to issue some new debt.
The plan in question calls for Norwegian Cruise Line Holdings’ NCL Corporation unit to sell $790 million in new debt. That will be sold in senior secured notes that will come due in 2029, so basically, five-year notes. Norwegian will put up 14 vessels as security on the debt, and those same vessels will also serve as security on a senior secured credit facility as well as a set of senior secured notes paying 8.375% that will come due in 2028.
Meanwhile, cruisers have a little more incentive to sign on and help Norwegian pay down that newly-minted debt. The “Free at Sea” promotional offer—which includes a range of extra goodies from drinks to shoreside excursions—is increasingly regarded as a good deal by cruise package reviewers. While it comes with a few caveats—particularly around what cruisers need to buy to get the most out of it—the positive ink coming out around the deal should help drive cruisers to upgrade, thus improving the firm’s bottom line.
Is Norwegian Cruise Line Stock a Buy?
Turning to Wall Street, analysts have a Hold consensus rating on NCLH stock based on four Buys, eight Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NCLH price target of $20.81 per share implies 28.06% upside potential.
