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Norwegian Cruise Stock Down on Extended Voyage Suspension

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Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) recently announced extension of its pause on global cruise voyages owing to the coronavirus pandemic. Following the news, shares of the company declined 1.6% during trading hours on Oct 5.

The extension applies to all voyages for Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises between Nov 1 and Nov 30. However, for cancelled cruises, guests are likely to be notified through communication through travel advisors.

The cruise industry is witnessing a slump in demand for cruise on account of the coronavirus-induced shutdowns. However, the company stated that cruise bookings for fourth-quarter 2020 and 2021 are strong, while pricing for 2021 remains within historical ranges. The company is also continuing to take bookings for 2020, 2021 and 2022.

In the past six months, shares of the company have gained 54.3% compared with the industry’s 44.8% growth.

Enough Liquidity to Tide Over Pandemic

Cash and cash equivalents as of Jun 30, 2020, were $2.3 billion, up from $252.9 million as of Dec 31, 2019. In an effort to boost liquidity, the company launched a series of capital markets transactions. As a result of high demand, oversubscription and the full exercise of options to purchase additional ordinary shares and exchangeable notes, the total amount of gross proceeds rose to roughly $1.5 billion. Following these transactions, the company’s total pro-forma liquidity was approximately $2.8 billion as of Jun 30, 2020.

After cost reductions and cash conservation efforts, the company’s cash burn is expected to be $160 million per month. Although total debt at the end of Jun 30, 2020, was $10.3 billion, the company is confident that with the amount of liquidity it holds, it can survive in a zero-revenue scenario for 12 months.

Norwegian Cruise — which shares space with Carnival Corporation & Plc (CCL - Free Report) and Royal Caribbean Cruises Ltd. (RCL - Free Report) in the Zacks Leisure and Recreation Services industry — has a Zacks Rank #5 (Strong Sell) at present.

A Key Pick

A better-ranked stock in the leisure space is Twin River Worldwide Holdings, Inc. , which carries a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Twin River’s 2021 earnings are expected to surge 331.33%.

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