After weathering pandemic storm, cruise-line stocks offer upside, says Stifel
By James Rogers
It's 'like old times again' for cruise operators
Like the rest of the travel industry, cruise operators have weathered a pandemic-related storm over the last couple of years, but they now deserve attention from investors, says analyst firm Stifel.
"We remain bullish around the cruise industry for the positive long-term supply outlook that we continue to believe is being overlooked by investors at this point," Stifel analyst Steven Wieczynski wrote in a note. The analyst firm recently hosted investors for its annual South Florida Cruise Tour, which featured meetings with the management teams of Norwegian Cruise Line Holdings Ltd. (NCLH),
"We believe moving forward, the entire cruise industry will be in a position where net supply growth could fall to unprecedented levels over an extended timeframe that the industry has never witnessed before," added Wieczynski.
Related:Norwegian Cruise Line's bookings and capacity are heading in the right direction, analysts say
Stifel has buy ratings for Norwegian, Carnival, Royal Caribbean and OneSpaWorld.
"This trip felt like old times again as all the cruise operators (and OSW) provided encouraging booking/demand commentary while their pricing outlook was strong/upbeat," wrote Wieczynski.
Last week Norwegian reported a wider-than-expected fourth-quarter loss, although revenue was higher than forecast. The cruise operator says its affluent target customers are opening their wallets for travel both now and in the future.
Royal Caribbean Group recently said that bookings have "significantly" exceeded prepandemic levels. And in December,
Now read:Royal Caribbean's stock cruises to 9-month high as bookings top prepandemic levels
"While investors remain somewhat hesitant to jump back into cruise stocks given the uncertainty around long-term demand/pricing/leverage, we believe since cruising is essentially now back to normal, investors will start to refocus on cruise names again in anticipation of the lower supply environment down the road," wrote Wieczynski.
Norwegian's stock is up 31.5% this year, Carnival's is up 35.8%, Royal Caribbean's is up 49% and OneSpaWorld's is up 21%, outpacing the S&P 500's gain of 4% over the same period.
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March 07, 2023 21:27 ET (02:27 GMT)
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