Carnival and Cruise Stocks Upgraded as Vaccinations Widen

'With COVID cases dropping and vaccine penetration rising,' it's full-steam ahead for the cruise lines Carnival, Norwegian and Royal Caribbean, Macquarie says.
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Cruise-ship stocks rose on Tuesday as Macquarie upgraded three of the biggest names to outperform from neutral: Norwegian Cruise Line  (NCLH) - Get Report, Carnival  (CCL) - Get Report and Royal Caribbean  (RCL) - Get Report.

Macquarie analyst Paul Golding acted on the easing of the coronavirus crisis. “With Covid cases dropping and vaccine penetration rising, we think most negative catalysts are now in the rear-view mirror,” he wrote in a commentary.

Norwegian stock recently traded at $30.57, up 2.4%; Carnival stock at $27.35, up 2.6% at $26.99; and Royal Caribbean at $93.47, up 2.3%.

All the stocks got hammered last year, as the pandemic shut down the companies’ ships -- as well as the entire travel industry -- and their customers stayed home.

But they have bounced back in the past seven months amid enthusiasm for vaccines and economic recovery.

“While [the] shares have bounced quite a way off their one-year lows, barring recession or a sector rerating the catalysts should trend more positive from here into summer,” Golding said, according to Barron’s.

Cruises ceased last March, and when trips in and out of the U.S. will resume is unclear. 

Sailing schedules have been suspended into the spring. But “technical instructions from the [Centers for Disease Control and Prevention] are forthcoming and could drive more confidence,” Golding said.

Last week, Carnival said it was extending its suspension of U.S. cruises through the end of May.

Also last week, Royal Caribbean reported a wider-than-expected fourth-quarter loss and a narrower-than-estimated adjusted loss. 

The Miami company registered a loss of $1.37 billion, or $6.09 a share, swinging from profit of $273.1 million, or $1.30 a share, in the year-earlier quarter.