Miami-based Norwegian Cruise Line Holdings Ltd. (NCLH) is a leading global cruise company operating three award-winning brands: Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises. With a market cap of $8.4 billion, the company offers luxurious and innovative travel experiences across nearly 700 destinations worldwide, supported by an extensive fleet of best-in-class ships and over 41,000 team members.

Companies worth between $2 billion to $10 billion are generally described as "mid-cap stocks," and NCLH fits right into that category, demonstrating its significant presence in the leisure and tourism industry. As a pioneer in modern cruising, the company continues to redefine vacationing with its commitment to excellence and customer satisfaction

Despite its notable strengths, NCLH stock has plummeted 33.4% from its three-year high of $29.29 touched on Jan. 31. Meanwhile, the stock has dropped 24.8% over the past three months, significantly underperforming the Dow Jones Industrial Average’s ($DOWI) marginal 39 bps dip during the same time frame.

NCLH has underperformed the Dow over the longer term as well. NCLH stock has dipped 1.8% over the past six months and gained 1.3% over the past 52 weeks, notably lagging behind Dow’s marginal uptick over the past six months and 7.8% returns over the past year.

To confirm the recent downturn, NCLH has fallen below its 50-day moving average in February and below its 200-day moving average in early March.

Despite reporting record revenues and beating Street expectations, NCLH stock plunged 5.3% after the release of its Q4 results on Feb. 27 and continued to fall in the subsequent trading sessions. The company’s topline increased 6.2% YoY to $2.1 billion, surpassing analysts’ projections by approximately 1%. It also showcased impressive cost efficiency leading to a solid 30% growth in adjusted EBITDA to $468.2 million and its adjusted EPS grew to $0.26 up from a negative $0.18 in the year-ago quarter. While the EPS surpassed the management’s guidance of $0.09, this was primarily driven by a $0.15 benefit from forex rates.

On an annual basis, NCLH’s adjusted EBITDA soared 32% YoY to $2.5 billion and adjusted EPS surged to $1.82 significantly up from $0.70 in FY23. However, the company expects its earnings growth in FY25 to remain much more modest as compared to FY24. In FY25, NCLH’s adjusted EBITDA is expected to increase to $2.7 billion and EPS is estimated to reach $2.05, which unsettled investor confidence.

Meanwhile, NCLH has notably underperformed its peer Royal Caribbean Cruises Ltd.’s (RCL) 21.2% surge over the past six months and 54.3% gains over the past year.

Nevertheless, analysts remain optimistic about the stock’s prospects. Among the 20 analysts covering the NCLH stock, the consensus rating is a “Moderate Buy.” Its mean price target of $29.19 suggests a massive 49.7% upside potential from current price levels.