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Morgan Stanley is getting more optimistic on shares of Royal Caribbean after a rough patch of sailing during the pandemic. Analyst Jamie Rollo upgraded the cruise stock to equal weight from underweight, calling it the “superior cruise operator” coming out of the Covid. “RCL looks better positioned than peers, having recovered occupancy fastest, and its superior cost control has led to a faster recovery in EBITDA (ex. fuel) vs peers,” Rollo said. To be sure, Morgan Stanley remains cautious on the industry going forward, expecting pricing power to recover slower than other travel sectors due to lingering Covid concerns and high growth in industry supply. Promotional acitvity my also perisst in weaker demand areas, Rollo said. “Travel agent commentary continues to be mixed, with some agents reporting a good level of interest for 2023 itineraries and good momentum into the new year, and others highlighting concerns around Covid/mask mandates after the increase in cases in China, an oversupply of inventory in the Caribbean, and continued economic/inflation concerns,” Rollo said. Along with the upgrade, Rollo raised his price target on the stock to $50 from $40 a share. That’s still about 13% below Monday’s close price. In the same note, Rollo downgraded shares of Norwegian Cruise Line to underweight from equal weight, citing difficulty with cost controls relative to peers. His adjusted $11.50 price target from $13 a share means the stock stands to lose nearly 17% from Monday’s close. Rollo also lowered the bank’s forecasts for Carnival , expecting another year of losses in 2023 for the cruise company. — CNBC’s Michael Bloom contributed reporting
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