Should we be paging Captain Stubing right now? It’s starting to look that way as analysts are increasingly weighing in on the side of cruise line stocks. Already, Carnival (NYSE:CCL) and Norwegian Cruise Line Holdings (NYSE:NCLH) have shot up over 4% each as a result of a report from Redburn Atlantic.
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The report, penned by analyst Alex Brignall, noted that the troubles of the pandemic have finally gone out to sea for cruise lines and that the albatross is off from around its neck for good. That prompted Brignall to not only hike both cruise lines from “neutral” to Buy but also to upgrade the price targets on each as well. Now, Brignall’s price target on Carnival is $23 per share, and Norwegian’s is $25 per share. It’s been a strong year for both so far, and though the consumer is significantly weakened by skyrocketing inflation, there’s still room for something special like a cruise.
Indeed, this is part of a larger phenomenon recently revealed by the CEO of Lowe’s (NYSE:LOW), Marvin Ellison. Ellison noted that, while shoppers were taking the “cautious approach” to big-ticket items for the home, they were willing to satisfy pent-up demand for travel. That’s a sentiment that’s been echoed elsewhere for some time now, and the “pent-up demand” theory still seems to be running. While Ellison looks for the pent-up demand to burn itself out eventually and restore normalcy, we’re still looking at a period where people are willing to spend more for concert tickets than for a new dishwasher. That’s a prime environment for cruise lines as well.
Interestingly, both Carnival and Norwegian stocks have a lot in common. Both are considered Moderate Buys by analyst consensus. Both have similar share prices right now. And both also have very similar average price targets producing comparable upside potentials. Right now, Carnival has 24.01% upside potential on an average price target of $19.50. Meanwhile, Norwegian has 25.82% upside potential on an average price target of $21.54.
