By Mackenzie Tatananni
Shares of Carnival and Norwegian Cruise Line Holdings are sailing higher Monday after Truist Securities analysts raised their price targets and projected smooth seas ahead for the cruise companies.
Carnival rose 2.4% to $26.05, putting the stock on track for its highest close since September 2021, according to Dow Jones Market Data. Norwegian saw even bigger gains, with shares up 3.5% to $27.84, snapping a two-day losing streak.
Competitors Royal Caribbean Group and Viking Holdings were up 0.4% to $245.02 and 0.6% to $46.73, respectively.
Analysts led by C. Patrick Scholes raised price targets "across the board" for the four stocks after examining so-called big data and speaking with senior executives in the travel industry. "Despite our attempts to find negatives, it's all looking very good," Scholes said.
Truist Securities increased its price target on Carnival to $29 from $20 and its target on Norwegian Cruise Line to $35 from $25.
The firm also hiked its targets on Royal Caribbean to $272 from $204 and Viking to $49 from $38.
Scholes cited the four stocks' "impressive performance" over the past three months, which included seeing returns of 38% to 54%, beating the S&P 500.
"While we tried to find something materially negative to make a contrarian call, the data points continue to look very encouraging and the conversations were all extremely positive," Scholes added.
The analyst noted an improvement in ticket pricing across all four cruise lines since July, with a base of booked business driving last-minute pricing power. Despite higher prices and longer reservation windows, fiscal 2025 remains booked "significantly ahead of historical levels," Scholes said.
Of all the big cruise lines, Royal Caribbean "wowed" Truist's industry contacts the most. The company has pushed ahead with the construction of three major destinations in a span of two years. One private island destination, Perfect Day Mexico, is expected to "strengthen the brand's short cruise market" from Galveston, Texas when it opens in 2027.
Sholes noted the industry is fast approaching "a unique period of historically low supply growth" that could usher in a potential "Golden Era" for cruise companies.
Despite raising price targets, Truist Securities has maintained its rating on the stocks. The firm rates Royal Caribbean Group and Norwegian Cruise Line a Buy, while Caribbean and Viking Holdings are rated a Hold.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 02, 2024 12:38 ET (17:38 GMT)
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