UPDATE: SunTrust Downgrades Norwegian Cruise Line, Changes Estimates

In a research note released Monday, SunTrust analyst C. Patrick Scholes downgraded Norwegian Cruise Line NASDAQ: NCLH) from Buy to Neutral. In addition, the analyst decreased the price target from $41 to $37, primarily on the basis of continued weak pricing trends.

The analyst decreased its earnings estimates on the company to $2.19 per share from $2.23 for 2014. The company gave guidance of $2.20 to $2.35.

In addition, the analyst is estimating $2.61 EPS instead of $2.71 for 2015. The consensus estimate was $2.68.

According to a survey SunTrust conducted in May, it showed a downward trend in the pricing for sailing over the course of the next 12 months.

Scholes continued to state, “We feel there is still downside risk to our lowered projections and even more so to consensus estimates.”

The analyst is projecting a 2.5 percent pricing growth for the second-half of 2014, versus a previous rate of 3.5 percent.

The analyst said that current pressures in the Caribbean will ease in 2015 and will continue to improve in 2016; however, there are still some other issues:

1) Pricing gap for Norwegian Cruise Line's new ships continues to weaken.
2) Onboard spending has been surprisingly modest.

Shares of the Norwegian Cruise Line are down 2.3 percent and are down 10 percent year-to-date.