What happened

Cruise stock investors caught a break on Tuesday, when analysts at Australia's Macquarie Group upgraded stocks across the sector:

  • Carnival Corporation (CCL 1.13%) (CUK 0.88%) -- outperform.
  • Norwegian Cruise Line Holdings (NCLH -0.21%) -- outperform.
  • Royal Caribbean (RCL 0.54%) -- you guessed it. This one's going to "outperform" the market, too, said the banker.

And all three stocks are up in early afternoon trading, 3.5%, 3.2%, and 2.9%, respectively, as of 12:15 p.m. EST.

Three cruise liner ships lined up abreast in port

Image source: Getty Images.

So what

Macquarie's timing is curious, coming just one day after both Norwegian and Royal Caribbean both basically admitted they are starved for cash. On Monday, Norwegian subsidiary NCL Corporation announced a private offering of $575 million worth of "5.875% Senior Notes due 2026" (i.e., debt) and its subsidiary offered a further $525 million in "6.125% Senior Notes due 2028" (i.e., even more debt).  

Separately but relatedly, Royal Caribbean announced yesterday that it is selling another 16.9 million shares of stock for $91 apiece, hoping to raise $1.5 billion in new cash for itself.  

Oh, and in case you forgot, last month Carnival Corporation raised $3.5 billion in debt and sold $1 billion in stock!

Now what

I suppose you could look at all this raising of cash as a good thing -- as evidence that the cruise companies have access to all the cash that they need to get them the rest of the way through the recession, and until cruising activities can resume. But you can also look at it as evidence that, even after the crisis is past, these companies are going to set sailing with a boatload of debt, and their shareholders will emerge with their ownership stakes significantly diluted.

Nevertheless, Macquarie is adopting the glass half-full view. With 2020 earnings reports out of the way, cruise postponements now pushed out to June, COVID-19 cases declining, and vaccinations proceeding briskly around the globe, the analyst argues that most of the negative catalysts that could drive down cruise line stock prices are out of the way.  

Result: Even if everything's not quite smooth sailing for the cruise industry just yet, it should be smooth-er sailing (at least) from here on out. That alone seems good enough news for investors today.