Investing.com -- Norwegian Cruise Line was lifted to Overweight from Neutral at JPMorgan (NYSE:JPM) on Monday, with the bank citing strong demand trends and resilience in discretionary spending despite macroeconomic concerns.
The firm’s analysts hosted Norwegian’s CFO Mark Kempa and Head of Investor Relations Sarah Inmon at the 2025 Gaming, Lodging, Restaurant & Leisure Conference in Las Vegas.
According to JPMorgan, management saw "zero detectable change" in demand behavior, even as concerns persist over a potential consumer slowdown.
“No change in booking curves to indicate irregular patterns, no cracks in onboard spend (including in high discretionary purchase categories of the Spa & Casino (EPA:CASP)), and no change in cancellation rates,” the analysts wrote.
NCLH’s CFO reportedly stated that the cruise industry remains insulated relative to airlines and lodging, with Norwegian benefiting from two key advantages.
First, the "Value Gap" remains at 30-35% compared to land-based alternatives, down from last year’s 40% but still well above the 20-25% pre-pandemic level.
Second, the "Experience Gap"—which includes better ship hardware and destinations like Great Stirrup Cay, expected to host 1 million guests by 2026, up from 400,000 in 2024—allows the company to generate higher onboard spending while enhancing the guest experience.
Norwegian’s high-income customer base also provides stability, said JPMorgan. The company’s average household income for guests is above $200,000, which, combined with strong demand for cruising and industry supply growth of only 3.5% through 2028 (compared to 5% historically), is said to create a buffer against potential consumer weakness.
With cruising still representing only 3-4% of the $2 trillion global vacation market, JPMorgan sees growth potential for Norwegian and the broader cruise sector.