The roll-out of Pfizer’s (NYSE:PFE) vaccine is warming up investor interest in cruise operator stocks. Shares of Carnival (NYSE:CCL) look set to reverse three days of losses. CCL stock is up more than 4% on Monday.
And Carnival isn’t alone. Both Norwegian Cruise Line (NYSE:NCLH) and Royal Caribbean (NYSE:RCL) are active after the opening bell.
Trucks rolled out of drug maker Pfizer’s Portage, Michigan plant on Sunday morning with the first doses of the company’s long-awaited Covid-19 vaccine, headed for more than 63o locations across the country.
Suspensions Weigh on Cruise Stocks
All three cruise operators have seen pressure on their stock prices as sailing suspensions were extended in recent months.
Last week, S&P Global Ratings placed Royal Caribbean on credit watch negative, saying that RCL’s credit listing “reflect the heightened likelihood that we will lower our rating within the next few months, given a high degree of uncertainty as to Royal’s recovery path and its ability to substantially improve leverage in 2022 from what will likely be unsustainable levels in 2021.”
Barron’s reported that most of Royal Caribbean’s commercial operations have been suspended since mid-March due to the pandemic. It has had a limited number of sailings outside U.S. waters.
NCLH, which also carries a B+ issuer rating, was also placed on credit watch negative following the latest extension of its cruise halt, for now at least until Feb. 28. “We expect [Norwegian] to burn more cash relative to our previous expectations and for leverage to remain very high in 2021,” according to S&P Global Ratings.
Smooth Sailing Ahead for CCL Stock and Its Peers?
With the vaccine a reality and pent-up travel demand reaching a simmer, is now the time to get back into the stocks of these three cruise operators?
That depends on your investment time horizon.
InvestorPlace contributor Ian Bezek, writing recently on CCL, advised that “unless you’re looking to take a long-term position in Carnival stock, there’s no rush to buy here.” “From a trading perspective,” he wrote, “it makes sense to wait on Carnival until the vaccines actually reach mass distribution early next year.”
Meanwhile, on RCL, David Moadel noted that “with positive vaccine news and a solid capital position, however, it’s entirely possible that Royal Caribbean can turn the ship around in 2021.”
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.
