Why Are Cruise Stocks Down Today?


  • A series of pressures appear to be building for cruise stocks in some key travel markets.
  • An analyst from BofA released a note on the sector highlighting some key pricing power issues.
  • If the consumer is indeed weakening, this is a sector that could continue to get revised lower.
cruise stocks - Why Are Cruise Stocks Down Today?

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A range of cruise stocks are seeing some significant selling pressure build today, as investors price in analyst warnings on the sector.

Analyst Andrew Didora of BofA released a note on the sector that is garnering significant attention today. This note has shares of Carnival (NYSE:CCL), Royal Caribbean (NYSE:RCL), Viking Holdings (NYSE:VIK) and Norwegian Cruise Line (NYSE:NCLH) down between 4% and 8% in early afternoon trading.

Notably, pricing pressures appear to be the key item of concern for this particular analyst. Popular cruise routes in the Caribbean, Europe and the Mediterranean are seeing pricing declines, while other routes, such as those to Alaska, remain robust.

Of course, as is the case with most sector-specific notes, some divergence among carriers was noted. Let’s dive into what this analyst note highlights and why the sector is declining so sharply today.

Cruise Stocks Down on Bearish Analyst Note

For certain sectors, such as the cruise industry, analyst notes can be very meaningful. Many investors don’t spend the same amount of time and effort analyzing the financial details of these companies, including real-time pricing data. So, when notes like these arise, many investors are quick to update their financial models.

The BofA analyst noted that certain cruise lines appear to be outperforming others, with Viking seeing among the lowest price volatility of the group. However, a broader trend appears to be forming, and most industry players are seeing weakening pricing power. This suggests the consumer may not be as strong as is commonly believed, and perhaps much of the post-pandemic “revenge spending” we’ve seen has fizzled out.

Softer pricing in ocean markets is notable, as these are among the bigger-ticket cruises most operators offer. We’ll have to see if these dynamics change. But for now, the market appears to be pricing in softer quarters moving forward. Given the heavily indebted balance sheets of many cruise companies, that’s not a good thing.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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