Norwegian Cruise (NCLH) Commission Changes May Impact Net Returns, UBS Notes

Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) ranks among the mid-cap stocks to buy according to top investors. On January 21, UBS analyst Robin Farley affirmed a Neutral rating and $27 price target for Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH). The update follows Norwegian’s December 23 announcement that all non-commissionable rates would be eliminated beginning December 26, 2023, for cruises sailing May 1, 2026 or beyond.

This adjustment substantially raises the commission levels paid to travel brokers, which one cruise marketer said might cut Norwegian’s net return by 200-300 basis points for its particular business. UBS emphasizes that the commission hike wouldn’t be applicable to more than half of the 2026 inventory sold before the beginning of the calendar year, nor to cruises sailing before May 1.

According to the firm, the commission rise only applies to the Norwegian brand, which accounts for around 85% of NCLH’s fleet, and has no bearing on cruises offered directly to customers, which UBS says make up more than half of sales for several large-ship brands.

Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is a global cruise company offering itineraries to over 700 destinations. It operates Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises.

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Disclosure: None. This article is originally published at Insider Monkey.