JPMorgan analysts initiated Royal Caribbean (NYSE:RCL) at Overweight ($94 price target), with Norwegian Cruise Line (NYSE:NCLH) ($15 price target) and Carnival Corp. (NYSE:CCL) ($11 price target) started at Neutral in a note Friday.
The analysts explained that the firm's fieldwork and recent management access across the "Big 3" operators points to "fundamental momentum year-to-date with a record-breaking WAVE season (Jan-March) led by broad-based demand across (i) customer segments (new to cruise, new to brand, and loyalists), (ii) regions (w/ N/A> Europe and APAC reopen), and (iii) customer demographics - collectively providing ~65-70% visibility to FY23 revenues."
In addition, they noted that Chase credit card data for "Other Travel and Entertainment," which includes cruise-related spending, is tracking +47% vs. 2019 year-to-date.
"Cruise pricing stands 40-50% below land-based alternatives today relative to a ~25% pre-pandemic spread by our work equating to a 38% increase in current ticket prices to close the "relative" gap to 2019's alternatives value spread, (ii) cruise penetration is only 4% today in North America, and (iii) zero newbuild orders placed during the pandemic translates to a more manageable supply growth profile within the medium-term," explained the analysts.