BofA sees firm cruise demand supporting fourth-quarter yields
Carnival and Norwegian pointed to stronger booking and revenue trends, while Royal Caribbean was projected to exceed third-quarter net-yield expectations.
BofA Securities said indications from Carnival and Norwegian Cruise Line suggest demand remains positive and should support net yields into the fourth quarter. According to the firm’s preview note, Carnival reported faster booking momentum during the summer, helping it surpass third-quarter net-yield expectations and raise its fourth-quarter outlook.
Norwegian indicated that stronger revenue should lift its third-quarter results above guidance, the note said. BofA also reported that cruise spending growth accelerated to the high teens from July through September, after rising at a high-single-digit pace in May and June.
For Royal Caribbean, BofA projected a third-quarter net-yield beat and a 1.5% decline in net cruise costs, placing costs at the favorable end of company guidance. The firm maintained its buy rating and $330 price target for the cruise line.
BofA said Viking should continue to show healthy demand, although low water levels on the Danube and Rhine were adding cost pressure into early in the fourth quarter. The firm reduced Norwegian’s price target to $17 from $21 while retaining a neutral rating. It also lowered Viking’s target to $105 from $115 and kept its buy rating.
