Goldman Sachs Bullish on Cruise Sector, Sees Strong 2025 and Upgrades Norwegian Cruise Line to Buy Rating
Goldman Sachs is optimistic about the cruise sector, predicting a strong 2025 and upgrading Norwegian Cruise Line (NCLH) to a Buy rating in a recent note. The investment bank views the cruise industry as the “key winner” among leisure and lodging stocks this year, driven by continued growth in new-to-cruise passengers, projected to increase by the “mid teens” year-over-year.
Goldman Sachs expects strong demand to outpace supply, leading to further pricing power for cruise lines. The bank highlights the value gap between cruises and land-based vacations, noting that market penetration remains low, providing ample room for expansion. New private islands and ship launches are also expected to support pricing power and make up for pent-up demand from earlier years.
For NCLH specifically, Goldman Sachs raised its price target to $35, representing a 27% upside, citing accelerated Net Purchase Intent and significant cost savings still to be realized. The firm believes NCLH will be able to achieve a 2.5-point yield-to-unit-cost spread in 2025, providing potential upside to estimates and narrowing its valuation gap with competitors.
Goldman Sachs’ optimistic outlook on the cruise sector is reflected in its continued Buy ratings on other major cruise operators, including Carnival Corporation (CCL) and Royal Caribbean (RCL).