COVID variants are unlikely to hurt cruise demand moving forward, at least in the U.S., says James Hardiman, who’s bullish on the underperforming sector.
Hardiman’s remarks on CNBC’s ‘Power Lunch’
Despite a recent rebound, cruise stocks are still down significantly from their highs before the pandemic. And that means “opportunity”, as per the Citi analyst. On CNBC’s “Power Lunch”, he noted:
Versus 2019 levels, cruise stocks are still down up to 60%, relative to S&P that’s up 40%. These have been massive underperformers. Cruise industry is one of the last remaining pure-play reopening stories. So, I think there’s an opportunity there.
Hardiman, however, clarified that even in the face of rising demand, cruise stocks will “take a while” to return to their pre-pandemic earnings power.
The edge that Norwegian has over its rivals
According to the Citi analyst, within the cruise space, Norwegian Cruise Line Holdings Ltd (NYSE: NCLH) has an edge over its market peers. The stock is already up 40% since mid-March. Hardiman added:
The case in favour of Norwegian is that they target a more upscale consumer; higher income levels than what you’ll see at a Carnival. And I think investors feel more comfortable about the outlook for the higher-end consumer.
In March, Norwegian raised a key fee applicable on all bookings made after April 1st. The Cruise Line is expected to report its quarterly results early next month.
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