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.
Thefly.com 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.
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.