The brokerage had believed Sheehan would be staying on five years post the initial public offering in 2013 and was not looking to leave, analyst Tim Conder said in a note.
The note stated many investors questioned the hiring of Drew Madsen as president and chief operating officer of the Norwegian Cruise Line brand given Madsen's Darden Restaurants background, and the brokerage itself questioned the other 'abrupt departure'—of Kunal Kamlani, former president and coo of Prestige Cruises, at the beginning of December.
Some had speculated Kamlani could have been a long-term successor candidate to Sheehan.
'Sheehan had stated to us upon the hiring of Drew Madsen that ''I'm not going anywhere and Drew will certainly help me move my agenda forward.'' So are there issues regarding the hire of Madsen? [The] integration of Prestige—degree of cost cuts, approach?' Conder said.
The brokerage noted Sheehan's successor, Frank Del Rio, is well experienced and respected in the cruise industry.
'We have known Del Rio for several years and view him as a very capable and experienced industry executive,' Conder said yet questioned how long Del Rio, 60, intends to stay at NCLH, his view of the planned integration and strategic approach versus Sheehan's and his view of Madsen. Plus, might Kamlani come back?
'Given the now much thinner and less cruise experienced core executive ranks,' Conder said, listing Del Rio, cfo Wendy Beck and Montague, 'we are cautious near-term pending answers to questions.'
He said NCLH earnings per share, inclusive of Prestige, should approximate at least $2.80 in 2015, given management's statement that Prestige would be 7% to 9% accretive this year, the 5-cent per share cost of Oceania's Insignia fire and favorable fuel cost and limited foreign exchange exposure.
Wells Fargo rates Norwegian 'outperform' (buy).
Update: Following a conversation with Del Rio and Beck, Wells Fargo said it appears Sheehan's decision to leave was not led by Apollo Management, indicative of a rift within the executive team related to hires, strategic direction or cost approach with the Prestige integration. Not was it related to the issue of no executive management on the board or a developing problem with the financial fundamentals.
'We were led to believe that Sheehan had something from a personal perspective that had changed in the last three months, leading to his decision to leave,' Conder said in an update to the brokerage's earlier note.