Last Update 07 Dec 25

NAS: Short Haul Leisure Demand Will Support September Results Amid Balanced Risk Profile

Analysts have nudged their price target on Norwegian Air Shuttle higher, from NOK 17.00 to NOK 17.75. They cite a stronger preference for short haul and leisure focused European airlines, as well as modest improvements in profitability expectations.

Analyst Commentary

Bullish analysts view the upgrade and higher price target as a signal that the market is beginning to more fully recognize Norwegian Air Shuttle's improving fundamentals and earnings power.

They highlight that the carrier's focus on short haul and leisure routes positions it well for near term demand trends in European travel, particularly into the September quarter results.

Bullish Takeaways

Preference for short haul and leisure exposure is expected to support higher load factors and yield resilience. This can underpin upside to revenue forecasts and justify a premium to prior valuation multiples.
The raised price target suggests confidence that profitability improvements are becoming more sustainable, narrowing the gap between current trading levels and analysts' estimates of fair value.
Stronger demand visibility into the September quarter gives bullish analysts greater conviction in earnings execution. This reduces perceived earnings risk and supports a more constructive stance on the stock.
Improved balance between growth and profitability in the network strategy is seen as enhancing the airline's ability to generate free cash flow, an important driver of long term equity value.

Bearish Takeaways

Bearish analysts caution that the upgrade is predicated on continued strength in leisure demand. This leaves the valuation vulnerable if macro conditions weaken or consumer spending softens.
The stock's rerating toward the new price target may compress the margin of safety, limiting upside if cost pressures or operational disruptions weigh on execution.
Concentration in short haul leisure markets can heighten exposure to competitive fare pressure, which could cap yield growth and challenge the assumed trajectory of margin expansion.
Any disappointment around September quarter performance versus elevated expectations could trigger volatility, as current optimism is already partially reflected in the revised target.

What's in the News

Norwegian Air Shuttle has commenced a substantial share repurchase program authorized by shareholders, allowing buybacks of up to 96,388,046 shares (10% of its issued share capital) through June 30, 2026 (Key Developments).
The company has called a special shareholders meeting for November 20, 2025, with an agenda that includes electing the chair of the board of directors, signaling potential changes in governance and strategic oversight (Key Developments).
Operating statistics for September 2025 show higher capacity, traffic, and load factor compared with a year earlier, with monthly passengers rising to about 2.3 million and twelve month rolling traffic also trending up (Key Developments).
Norwegian is expanding its fleet plan by exercising options for 30 additional Boeing 737 MAX 8 aircraft, increasing its firm order to 80 jets and extending deliveries out to 2031, supporting a more modern and fuel efficient fleet (Key Developments).

Valuation Changes

The Fair Value Estimate remains unchanged at NOK 18.17, indicating no revision to the intrinsic value assessment.
The Discount Rate has fallen slightly from 9.67% to 9.62%, reflecting a modestly lower perceived risk profile or cost of capital.
Revenue growth has edged down from 5.77% to 5.64%, signaling a marginally softer outlook for top line expansion.
The Net Profit Margin has risen slightly from 5.82% to 5.85%, pointing to a small improvement in expected profitability.
The future P/E has declined marginally from 12.03x to 11.98x, suggesting a slightly lower valuation multiple applied to forward earnings.

Robust demand from growth in passenger numbers and new corporate travel agreements suggests potential future revenue growth for Norwegian Air Shuttle.
Operational synergies from acquisitions and new platforms, along with cost-reduction programs, could enhance efficiency and profitability.
Operational and financial uncertainties from legal issues, foreign exchange risks, and competition could hinder growth and affect Norwegian Air Shuttle's future revenue and margins.

Catalysts

About Norwegian Air Shuttle

Provides air travel services in Norway and internationally.What are the underlying business or industry changes driving this perspective?

The growth in passenger numbers and market share in Norway, along with increasing corporate travel agreements, indicates a robust demand for Norwegian Air Shuttle's services, suggesting potential revenue growth in the future.
The acquisition of Wideroe and the resulting operational synergies, as well as the launch of a new distribution platform, are expected to streamline operations and enhance efficiency, potentially improving net margins.
The introduction of Program X, focusing on cost reduction and revenue initiatives, suggests that Norwegian Air Shuttle is committed to enhancing profitability, likely impacting earnings positively in the coming years.
The anticipated positive impact of macroeconomic factors such as potential real wage growth and falling interest rates in Scandinavia could boost travel demand, potentially increasing revenue for Norwegian Air Shuttle.
The favorable outcomes related to fleet management and delivery of new aircraft by Boeing, amidst a market with reduced capacity from competitors due to engine issues, could support stable or improved yields, positively affecting future earnings.

Norwegian Air Shuttle Earnings and Revenue Growth

Norwegian Air Shuttle Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Norwegian Air Shuttle's revenue will grow by 5.8% annually over the next 3 years.
Analysts assume that profit margins will increase from 4.9% today to 5.9% in 3 years time.
Analysts expect earnings to reach NOK 2.6 billion (and earnings per share of NOK 2.41) by about September 2028, up from NOK 1.8 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as NOK3.4 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.6x on those 2028 earnings, up from 9.6x today. This future PE is greater than the current PE for the GB Airlines industry at 9.6x.
Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.91%, as per the Simply Wall St company report.

Norwegian Air Shuttle Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Norwegian Air Shuttle’s current challenges with punctuality (78.4%) and regularity (slightly below target) could negatively affect passenger satisfaction and retention, potentially impacting future revenue growth.
The ongoing legal battle over ETS obligations and potential penalties create uncertainty and financial risk, which could affect earnings if resolved unfavorably.
Fluctuations in the value of the Norwegian krone have negatively impacted operating expenses and liabilities, indicating foreign exchange exposure risks that could affect net margins.
Although the company has secured financing for its aircraft orders, uncertainties regarding aircraft deliveries from Boeing and engine issues with Airbus could disrupt fleet expansion plans, impacting operational capacity and revenue potential.
Competition in corporate travel markets remains intense, particularly with SAS’s aggressive pricing strategy, which could affect Norwegian’s ability to maintain or grow corporate travel revenue streams.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of NOK17.3 for Norwegian Air Shuttle based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of NOK19.0, and the most bearish reporting a price target of just NOK13.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be NOK43.4 billion, earnings will come to NOK2.6 billion, and it would be trading on a PE ratio of 11.6x, assuming you use a discount rate of 9.9%.
Given the current share price of NOK16.42, the analyst price target of NOK17.3 is 5.1% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Boost Norwegian Air Shuttle Price Target Citing Strong Short Haul and Leisure Outlook