Shares of Carnival and Norwegian Cruise Line Rise After Analyst Upgrades
Analyst Upgrades Carnival and Norwegian Cruise Line
Analyst Alex Brignall upgraded shares of Carnival (ticker: CCL) and Norwegian Cruise Line Holdings (NCLH) to Buy from Neutral with price targets of $23 and $25, respectively. The upgrades follow a strong year for cruise stocks.
Pent-Up Travel Demand Drives Tourism
Inflation has been rising, interest rates are high and recession concerns loom. But that hasn’t stopped people from going on vacation. The pent-up desire to travel following Covid-19 lockdowns has been driving tourism demand.
Carnival Chief Executive Josh Weinstein said in the company’s second-quarter earnings report that bookings and customer deposits hit all-time highs in the quarter. The stock has soared 87% this year. Norwegian Chief Executive Harry Sommer said there was a “healthy demand environment” for cruising. The stock has gained 34% in 2023.
Cruise Lines Well-Positioned Against Risks
Redburn analyst Alex Brignall argued that cruise lines are well-positioned against risks like inflation and high interest rates. He noted that cruise lines benefit from an almost exclusively international workforce, which has limited the impact of severe wage inflation in the U.S. Additionally, cruise lines have been repaying debt this year, either through internal cash flow or new debt raised at lower rates, reducing financing costs.
Shares of Carnival were rising 3.8% to $15.59 Thursday while Norwegian stock was gaining 4.3% to $17.05. Royal Caribbean (RCL) was up 1.4% and was maintained at Neutral by Redburn.