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Lynne Sweet / AP
- Cruise stocks gained Thursday after Bank of America improved its outlook for the struggling industry.
- Analysts at the bank have raised price targets for Royal Caribbean Cruises, Carnival and Norwegian Cruise Line Holdings, saying the widespread distribution of a COVID-19 vaccine may bring prices back to pre-pandemic levels.
- Carnival and Norwegian gained 11% and 10% respectively. Royal Caribbean rose 6% to intraday highs.
- Still, cash requirements and additional delays in service could weigh on stocks until 2021, the bank said.
- Visit the Business Insider homepage for more stories.
Cruise stocks climbed higher on Thursday after the Bank of America raised its forecast for an industry-wide recovery.
Widespread vaccination gives confidence in a full recovery of the cruise industry in 2022, Bank of America analysts Andrew Diadora and Geoffrey d’Halluin said Thursday. Cruises are a major part of the travel recovery theme, and a vaccine challenges previous equity highs, they added.
The bank raised its price target for Royal Caribbean Cruises to $ 60 from $ 34. Its price target for Norwegian Cruise Line Holdings has increased from $ 18 to $ 25. The team’s goal for the carnival has increased to 1,640 pence ($ 21.98) from 1,300 pence ($ 17.43).
The bullish note lifted the cruises in Thursday’s trading. Carnival and Norwegian gained 11% and 10% respectively. Royal Caribbean rose 6%.
Read more: Morgan Stanley Selects 42 Stocks to Buy as Their Company’s Unique Assets Help They Drive Strong Growth for Many Years to Come
The bank also raised its profit forecast for the three companies.
Cruise stocks have been among the most popular “reopens”, with investors betting on the industry rebounding alongside the virus-ravaged economy. Positive vaccine updates have repeatedly boosted stocks at cruise lines, airlines and hotels.
The return to pre-pandemic heights will come with several hurdles, the team warned. The Centers for Disease Control’s October navigation order gives the institute the ability to delay cruises further, and Bank of America now expects service to resume in March instead of its December forecast and previous January.
Delay in service and the costs of meeting CDC guidelines could also lead to increased debt in the short term, analysts said. Cruise lines may need to raise additional capital in 2021, and the stress of the balance sheet could last into the New Year, the team added.
Royal Caribbean traded at $ 84.09 at 12:40 p.m. ET on Thursday, down 36% year-to-date.
The carnival traded at $ 23.02, down 54% since the start of the year.
The Norwegian traded at $ 25.41, down 56% year-to-date.
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