It’s been a tough year for cruise ship operators but there has been hope at the end of the tunnel for the industry with vaccinations on the rise and people eager to get traveling again.
Shares of Norwegian Cruise Line Holdings (NYSE:NCLH) have risen 25% over the past 12 months and if not for a recent dip due to a rise in COVID-19 cases and concern surrounding the delta variant, the stock could be up even higher.
Florida is also making things harder for the company as the state prohibits businesses from any kind of vaccine passports to prove that someone has a vaccine. In retaliation, Norwegian Cruise Line has sued the state’s surgeon general, saying that, “it is otherwise preventing NCLH from safely and soundly resuming passenger cruise operations.”
However, with customers booking in advance and planning to make up for lost time, the stock could still be a good contrarian investment right now. With the dip in price, the potential is there for investors to earn a better return by locking in a lower price for the travel stock. Multiple brokerages have set price targets of $36 or more for the stock. And with shares of Norwegian falling to just above $23 last week, that is an upside of more than 56%.
There is definitely some risk involved given that an outbreak of COVID-19 on cruise ships could quickly send the stock back down. But with vaccination rates rising, it could be a calculated risk worth taking given the pent-up travel demand and the potential for Norwegian to have a stellar performance over the next 12 months as economies around the world start to open back up.