Morgan Stanley heads into the peak Wave Season for the cruise line industry with a mixed view of the sector.
“Some agents report a good start with luxury/smaller ships outperforming, others note ongoing Covid /economic concerns, and several flag growing promotional activity, weaker demand for big ships, and overcapacity in the Caribbean,” updated analyst Jamie Rollo.
While Wave Season is expected to be strong compared to the recent COVID-influenced years, the firm thinks bookings need to be stronger than pre-COVID to compensate for ongoing weakness in Europe and Asia sourced business.
After factoring in the new backdrop, Morgan Stanley upgraded Royal Caribbean Cruises (NYSE:RCL) to an Equal-weight rating and moved to a more bearish stance on Norwegian Cruise Line Holdings (NCLH) to Underweight from Equal-weight and price target reduction to $11.50. Carnival (CCL) was reiterated with an Underweight rating, but saw its price target increased to $7.
In premarket action on Tuesday, NCLH fell 3.12% and CCL slipped 0.80%. Meanwhile, RCL showed a 0.28% gain to add to Monday’s 4.18% rise.
All three cruise line stocks have a Seeking Alpha Quant Rating of Hold, but RCL has a slighter higher quant score than its peers.
Authore – Abhi bhardwaj