What happened
A new critique from an analyst made for an uninspiring Tuesday on the market as far as Carnival (CCL 3.54%) (CUK 3.28%) stock was concerned. As a result, the incumbent cruise line operator's share price submerged by almost 4% during the day, a notably steeper decline than the 1.4% suffered by the S&P 500 index.
So what
JPMorgan Chase launched coverage of three top cruise stocks, a lineup that includes Royal Caribbean and Norwegian Cruise Lines. In doing so, prognosticator Daniel Adam tagged only one with his bank's equivalent of a buy recommendation -- and that wasn't Carnival.
Carnival was pegged as a neutral at a price target of $13 per share. In pointing out that the stock has swooned by more than 52% so far this year -- a much deeper slide than those of its two peers, by the way -- this is justified, for the most part.
This justification is due to Carnival's "(1) apparent discount-to-fill pricing model, (2) aging fleet, and (3) exposure to rising fuel costs, as CCL is the only major publicly traded operator that doesn't hedge," Adam wrote in a new research note.
Now what
This doesn't mean the analyst is bearish on Carnival's prospects. He did point out that the company is the largest and most diversified operator in its field, adding that this, plus its relatively large scale, could help the stock perform well in an upturn.
Yet he feels that Norwegian is currently the best investment of the three stocks (he rated Royal Caribbean an underweight, or sell). In his view, Norwegian is less exposed to short-term financial pressures; his recommendation on the company's shares is overweight (i.e., buy).
