Following an official extension of the suspension of cruise operations from U.S. ports, Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) and Royal Caribbean Cruises Ltd (NYSE:RCL) have halted nearly all cruises through September against expectations of an August resumption, according to BofA Securities.
The Cruise Lines Analyst
BofA’s Andrew Didora updated the estimates to reflect a phased-in recovery beginning in October. The analyst also rolled forward the price targets for cruise lines to 2022 estimates.
- Didora maintained a Neutral rating on Norwegian Cruise Line Holdings with a price target lifted from $12.50 to $19.
- Didora reiterated an Underperform rating on Royal Caribbean Cruises and raised the price target from $23 to $40.
The Cruise Lines Thesis
Capacity for cruise lines is likely to remain at just 20% of fourth-quarter 2019 levels and may recover to only 75% in 2021, Didora said in a Wednesday note. (See his track record here.)
The analyst lowered 2020 earnings estimates:
- From a loss of $7.12 per share to a loss of $7.39 per share for Norwegian Cruise Line Holdings.
- From a loss of $14.18 per share to a loss of $15.29 per share for Royal Caribbean Cruises.
With the cruise industry not generating any revenue for six months this year, 2021 could be a transition year “as capacity and revenues likely ramp back up slowly throughout the year,” the analyst said.
NCLH, RCL Price Action
Shares of both Norwegian Cruise Line were up 0.19% at $16.45 at the time of publication, while Royal Caribbean shares were higher by 1.01% at $50.82.
Related Links:
Cruise Stocks Fall After Halting Trips From US Ports
Carnival Is Staying Afloat Through 2020, BofA Says After Cruise Line's Preliminary Q2 Report
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