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UBS upgrades Norwegian Cruise Line to buy, says shares can rally nearly 30% as bookings improve

After a rough patch, UBS thinks it’s time for investors to load back up on shares of Norwegian Cruise Line . “We are upgrading NCLH to buy from neutral given the significant improvement in bookings in its Q3 preview, showing it has caught up to the other cruise lines in occupancy while still keeping price nicely ahead of 2019 levels,” wrote analyst Robin Farley in a note to clients Wednesday. The company pre-reported occupancy of 82% for the third quarter, up from about 65% in the previous period. This contributed to Farley raising his 2022 and 2023 earnings per share estimates for the company. He now expects Norwegian to lose $4.66 per share in 2022, less than a previous forecast of a $4.97 per share loss. For 2023, he hiked his earnings per share estimate to $1.55 from $1.44. Shares of cruise companies have come under pressure in recent years as Covid-19 lockdowns shuttered business and put a damper on cruising demand. While UBS prefers shares of Royal Caribbean , Farley sees strength in Norwegian’s strong domestic customer base and its exposure to the luxury segment. UBS trimmed estimates and its price target on the stock to $15 from $18 a share, citing inflationary headwinds. The change still reflects a roughly 29% upside for the stock from Tuesday’s close. Shares are down about 44% so far in 2022 but gained more than 4% in premarket trading Wednesday — CNBC’s Michael Bloom contributed reporting

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