Two of the major cruise line operators on the scene, Carnival (CCL 7.64%) (CUK 7.68%) and Royal Caribbean (RCL 3.08%), had very different voyages on the stock market Thursday. Carnival didn't quite barrel into an iceberg, but investors nevertheless bailed, sinking its main class of shares by over 6%. On the other hand, Royal Caribbean enjoyed a pleasant sailing, gaining more than 1% on the day.
Carnival was hit by its fifth analyst price-target cut so far this week. This morning, before market open, UBS prognosticator Robin Farley trimmed her level by $1, to $11 per share. Farley isn't ready to run to the lifeboat yet, however, as she's maintaining her buy recommendation on the stock.
That followed another $1 price-target cut. In this case, it was by Morgan Stanley's Jamie Rollo, who now feels the stock is worth $6 per share.
In the wake of Carnival's third-quarter earnings release, published last week, Rollo has lowered earnings forecasts considerably for the company. He's concerned about weaker pricing and higher-than-expected costs. As such, he's keeping his underweight (i.e., sell) recommendation intact.
With Carnival really taking it on the chin from the analyst community this week, Royal Caribbean looks like the safer play for many investors. But investors should remember that the cruise industry isn't yet in placidly calm and very profitable waters, as we haven't fully gotten past the coronavirus pandemic and the industry's overall fundamentals remain somewhat shaky.