Last Update23 Oct 25Fair value Increased 5.01%
Analysts have raised their price target for Norwegian Air Shuttle from NOK 17.30 to NOK 18.17. They cite a more favorable outlook for short haul and leisure travel segments in the upcoming quarter.
Analyst Commentary
Bullish Takeaways
- Bullish analysts believe Norwegian Air Shuttle is well-positioned to benefit from a resurgence in short haul and leisure demand, contributing to higher expected revenues in the near term.
- The shift in focus from long haul to short haul operations is viewed as a strategic move that enhances the company's resilience amid changing travel patterns.
- Improved cost management and increased operational flexibility are cited as key factors likely to support margin expansion and profitability as the market recovers.
- Recent upward price target revisions reflect growing confidence in management’s execution and the robust outlook for the upcoming quarter’s results.
Bearish Takeaways
- Bearish analysts remain cautious about ongoing fuel price volatility, which could pressure profit margins despite positive traffic trends.
- Heightened competition in the short haul European market may limit Norwegian Air Shuttle's ability to raise fares or expand market share as aggressively as hoped.
- Uncertainties around consumer spending and economic headwinds are seen as risks that could temper growth, particularly if leisure demand softens unexpectedly.
What's in the News
- Norwegian Air Shuttle exercised its option to purchase 30 additional Boeing 737 MAX 8 aircraft, increasing its total firm order to 80 aircraft. Final deliveries are scheduled through 2031. The expansion aligns with Norwegian's fleet renewal strategy and ambitions for future growth. (Key Developments)
- For September 2025, Norwegian Air Shuttle reported year-on-year increases in available seat kilometers, revenue passenger kilometers, and passengers carried. The load factor rose to 86.6 percent. (Key Developments)
- On a rolling twelve-month basis ending September 2025, Norwegian carried over 23 million passengers. This reflects continued strength in demand and improvement in operational performance compared to the previous year. (Key Developments)
- For July 2025, Norwegian reported growth in passenger traffic and capacity. Year-to-date figures show increases across key operating metrics, indicating momentum in recovery and expansion. (Key Developments)
Valuation Changes
- Consensus Analyst Price Target has risen from NOK 17.30 to NOK 18.17, reflecting a more optimistic outlook for the company's valuation.
- Discount Rate increased marginally from 9.91 percent to 10.06 percent, which suggests a slight uptick in perceived risk or required return by analysts.
- Revenue Growth projections have improved from 5.78 percent to 6.17 percent, indicating stronger expectations for top-line expansion.
- Net Profit Margin has decreased from 5.91 percent to 5.42 percent, pointing to expectations of pressured profitability even with higher revenues.
- Future P/E ratio has climbed from 11.57x to 12.91x, suggesting higher valuations are being assigned relative to forecasted earnings.
Key Takeaways
- 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.
- 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 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.
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