Barclays rates Norwegian Cruise Line 'over weight' on strong demand

“NCLH is the highest beta Cruise stock, during what we expect will be a strong year for industry-wide fundamentals, with a relative valuation that is too attractive for us to ignore,” analyst wrote.

Demand for cruises remains robust, driven by competitive pricing compared to land-based vacations and growing interest in private island destinations. While the supply growth across the industry is expected to remain below pre-pandemic levels through 2025 and decelerate further in 2026 and 2027.

Norwegian Cruise Line, with its high sensitivity to market trends, is poised to benefit from a strong industry recovery. Barclays (LON:BARC) expects 2025 to be a strong year for the sector, supported by improved consumer sentiment and increased bookings following the U.S. elections.

Barclays also maintained a positive stance on Royal Caribbean (NYSE:RCL), calling it the 'best-in-class" operator on catalysts such as capital returns and new private island projects. However, it downgraded Viking Cruises, pointing to its premium valuation and lower upside potential due to its all-inclusive business model.

The bank views Norwegian's valuation attractive with a supportive backdrop for cruise demand and limited near-term risks.