BMO Starts Cruise Coverage With Royal Caribbean as Top Pick
The firm assigned Royal Caribbean an Outperform rating while initiating Carnival and Norwegian Cruise Line Holdings at Market Perform.
BMO Capital initiated coverage of three major cruise operators, naming Royal Caribbean Group its preferred stock in the sector. The firm rated Royal Caribbean Outperform and set a $370 price target, representing 31% upside from the company’s latest closing price.
BMO cited Royal Caribbean’s ability to retain existing guests while also attracting first-time passengers as a reason for its favorable view.
Norwegian Cruise Line Holdings received a Market Perform rating and a $21 price target. Analyst Tristan Thomas-Martin said Norwegian’s premium positioning remained appealing, but company-specific concerns weakened the investment case. He pointed to financial and operating results that have lagged key competitors, activist-investor involvement and a difficult business environment.
BMO also initiated Carnival Corp. at Market Perform with a $30 price target. The firm said positive cruise-industry demand was the main near-term catalyst it identified. Thomas-Martin said Carnival had largely finished its financial restructuring and was concentrating on stronger cash flow and better fleet efficiency, reducing the likelihood of a substantial near-term stock revaluation.
Carnival reported second-quarter revenue of $6.6 billion and earnings of $0.41 per share, with both measures exceeding Street estimates, according to the supplied report.
