RCL - Cruise line stocks rally after JPMorgan says booking momentum is not slowing

2023-06-12 08:25:11 ET

JPMorgan turned more constructive on the cruise line sector on Monday after recently meeting with management of Carnival Corporation ( NYSE: CCL ), Norwegian Cruise Lines ( NCLH ), and Royal Caribbean ( RCL ) at an event in Miami. The firm's key takeaway was the bullish tone from the the cruise line execs on current trends and early 2024 bookings, including the revelation that there are zero signs of momentum slowing. The pent-up loyalist demand a from a year ago was noted to be transitioning to new-to-cruise strength. Another huge pullout from the event was the increased balance sheet flexibility seen for cruise line operators with the ample liquidity for debt pay-down that is coming into the mix.

Analyst Matthew Boss and team upgraded Carnival ( CCL ) to an Overweight rating from Neutral. Carnival ( CCL ) earned the bull rating from JPMorgan due in part to a favorable risk/reward setup. Carnival ( CCL ) was also noted to have taken number of actions taken to improve the company over the past two years, including five new brand presidents over the past two years, 26 ships retired during the pandemic, repositioned ship assets to the most accretive brands, and revamped Cost Cruises to focus on its core market. Looking ahead, CCL is said to have an opportunity to drive improved brand clarity and pricing power through increased investment in advertising. The company's smaller capacity growth profile is expected to provided a faster pathway for management to focus on de-levering the balance sheet.

JPMorgan also lifted its price target on Neutral-rated Norwegian Cruise Line Holding ( NCLH ) to $16 and hiked its price target on Overweight-rated Royal Caribbean ( RCL ) to $103.

Shares of Carnival ( CCL ) were up 5.95% in premarket trading on Monday. Norwegian Cruise Line Holdings ( NCLH ) rose 2.85% and Royal Caribbean ( RCL ) was 2.25% higher.

More on cruise line stocks:

• Buy Norwegian Cruise Line For A Potential Strong 2023
• Carnival Corporation: Upgrading To A Buy
• Carnival Seeing Improved Demand, But Debt Load Is Burdensome
• Royal Caribbean: Off To The Races
• See the hotels, resort and cruise line stocks with the highest Seeking Alpha Quant Ratings

For further details see: