Norwegian Hit Rough Seas After Earnings—Viking Cruised Through

Key Points

• Norwegian and Viking both beat on earnings, but the market punished one and rewarded the other.
• The gap between "good" and "great" results is showing up in analyst price targets heading in opposite directions.
• Rising oil prices from the Middle East conflict could cap upside for both cruise stocks in the near term.

Norwegian Cruise Line Holdings Ltd. NYSE: NCLH and Viking Holdings Ltd. NYSE: VIK reported earnings on March 2 and March 3, respectively.

Heading into earnings, analysts were more bullish about Viking than about Norwegian. But both stocks were up over 13% in the three months, heading into earnings.

That was part of the sector rotation, which has been a developing theme in the market.

Cruise lines are part of the consumer discretionary sector that has been battered as investors saw easier gains in the technology sector.

That rotation may be on pause as investors try to position themselves to account for the current conflict in the Middle East.

But as the earnings reports for Norwegian and Viking show, there’s still an appetite for cruising, especially among the over-60 crowd that makes up a significant portion of each company’s target audience.

However, similarities stop there. That’s what investors are reacting to. Whereas Viking focuses like a laser on an adults-only, curated, luxury experience, Norwegian has a broad portfolio that spans different consumer markets.

A Case of Good Versus Great

Norwegian Cruise Lines delivered a good earnings report on March 2. Adjusted earnings per share (EPS) of 28 cents exceeded the forecast of 27 cents by a penny. But the company missed on the top line. Quarterly revenue of $2.24 billion was less than the $2.34 billion expected.

The market reaction was swift and severe, sending NCLH stock down approximately 14.5%. This was due less to the company’s results and more to its guidance. The company sees continued pressure on operations, which it attributed to what it termed the premature capacity increases to its Caribbean fleet. Management also said they had execution misalignment that weighed on its European and Alaska itineraries.

That contrasted with Viking Holdings, which delivered a great report. Adjusted EPS came in at 67 cents per share, well above the forecasted 54 cents per share. Revenue of $1.72 billion comfortably beat the $1.63 billion estimate. VIK stock was up 3.2% on a day when most of the market was down.

Not everything in Viking’s report was rosy. The company pointed to some constraints in building out its river cruise fleet. However, it deemed the headwinds to be manageable.

Analysts View Each Stock Very Differently

Prior to earnings, Norwegian was trading near its consensus price target of $25.60. The post-earnings move has pushed the stock down to a closing price on March 3 of $21.30, approximately 20% below the target.

However, investors may want to think twice before viewing NCLH stock as a buy-the-dip candidate. Since the company’s report, the Norwegian Cruise Lines analyst forecasts on MarketBeat show five analysts have lowered their price target for the stock. The lowest comes from JPMorgan Chase, which lowered its target to $19 from $20.

That contrasts with Viking Holdings, for which analysts were raising their targets before the earnings report. Many of those targets are above the consensus price of $69, and several are above the VIK stock closing price of $76.43 on March 3.

Momentum traders may view this as a case of NCLH stock offering value and VIK stock being priced for perfection. Strictly from a valuation perspective, a case could be made that NCLH stock is undervalued.

The cruise line’s price-to-sales (P/S) and price-to-book (P/B) ratios are below its historical average. And its price-to-earnings (P/E) ratio of 15.6x is only a slight premium to its historical average but is significantly lower than the lofty valuation of the S&P 500.

Meanwhile, VIK stock trades at a significant premium by nearly every measure. The company has been a favorite of investors since it began trading publicly about one year ago. Despite what many thought would be tough comparisons, the cruise line has managed to post significant year-over-year (YoY) gains in revenue and earnings in the past three quarters.

The Headwind Impacting Both Stocks

The current conflict in the Middle East is causing a spike in oil prices. Where those prices will be in six months or a year is hard to gauge. On its earnings call, Norwegian noted that its fuel costs are 51% hedged for 2026 and 27% hedged for 2027 to help mitigate the near-term volatility.

For its part, Viking noted that its river cruises will operate with fixed price contracts for a significant portion of 2026. Management also noted that its ocean fleet is designed for fuel efficiency, including a fleet that will soon include the world’s first hydrogen-powered cruise ship.

As for the operations themselves, Norwegian does not sail in the Middle East. Viking has paused its Egyptian cruises. However, the company noted that those cruises account for only about 2% of its business.

However, investors tend to act first and question later. That’s why the specter of higher oil prices may put a short-term ceiling on both VIK and NCLH.