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Analyst: Cruise Ship Stocks at 'Inflection Point,' Carnival Pegged to Surge 126%

By Rich Duprey – Sep 25, 2020 at 9:22AM

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A lot will hinge on what the CDC has to say about returning to open water.

The cruise ship industry has sunk so low one analyst believes it's ready for a turnaround.

Although Barclays analyst Felicia Hendrix admits her call may be a bit early, considering many of the cruise lines have pushed their return to the high seas into 2021, she believes the Carnival (CCL -1.99%) (CUK -1.85%), Norwegian Cruise Line Holdings (NCLH -3.16%), and Royal Caribbean Cruise Lines (RCL -1.30%) stocks offer the best risk-reward ratio in the U.S. leisure sector today. reports Hendrix upgraded her price targets on all three stocks, telling investors in a note she believes the industry is at an "inflection point," and none should benefit more than Carnival, which should surge ahead 126% to $31 per share.

Cruise ship on the ocean

Image source: Getty Images.

Any port in a storm

The cruise industry was absolutely wrecked by the COVID-19 pandemic after all cruises were canceled. While the companies have attempted to gauge their return to calmer waters, Hendrix sees the real catalyst for a comeback coming in the next few days when the Centers for Disease Control & Prevention updates its Sept. 30 no-sail date.

Although she says she thinks there is high probability the CDC will extend the sailing ban, she also believes the industry will be offered a light at the end of the tunnel, which would be a positive influence on its businesses and stocks.

Beyond Carnival's massive upgrade, Hendrix also has a positive outlook for the other names in the travel transportation industry. She has a $26-per-share price target on Norwegian, 78% above its $14.63 closing price yesterday, but she sees more modest upside to Royal Caribbean's stock with a price target of $68 per share, 13% above its $59.97-per-share closing price.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

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