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JP Morgan: Bet on 2 Cruise Line Stocks (and Avoid 1)
Despite being vaccinated in the markets, the coronavirus epidemic does not show any signs of abating. We are still facing serious social lockdown policies, with many states (such as California, Minnesota and Michigan) pushing tougher sanctions on this round than ever before. This is a huge blow to the leisure industry that is still far from one of the most difficult years in memory. The difficulties in renting rest restaurants are becoming more press, but for the cruise industry, Corona has been a complete storm. The epidemic-sponsored cruise industry – which generates $ 150 billion in business annually – expects 32 million passengers. In 2020. All this is gone now. During the summer, the industry turned around when more than 3,000 Covid cases were connected to 123 different cruise ships, resulting in 34 deaths. After such a difficult year, it is useful to go back and take a snapshot of the state of the industry. JPMorgan analyst Brandt Montour has just done that, with a special review of the cruise industry in general and the three cruise line giants in particular. “We believe that cruise shares may continue to grind higher in the near term, driven by widespread vaccine backdrop / progress. Looking ahead, operators will encounter plenty of headwinds when resuming operations in 2Q3Q21, but it Significant gradual improvement in revenue / cash flow over the period is likely to dominate the dominate narrative, and we believe investors will continue to see short-term shocks. Characterized by full-blown capacity in 2022, near-perfect businesses and managed price pressures so far, ”Montour said. That, after this background, Montour has chosen two stocks that are risk averse, and one that investors should avoid now. Using Tiparenx’s Stock Comparisons tool, we paired the three together to get a downside to what’s near-term for these cruise line players. Royal Caribbean (RCL) The second largest cruise line, the Royal Caribbean, is at the top of Montour and its pay. The company has devoted its resources to meeting and tackling epidemic challenges, both by reducing fluidity and streamlining and modernizing the fleet. Maintenance liquidity is the most important issue. While the company has resumed some cruising, and Silver Moon has also taken delivery of the new ship, most operations have stalled. Q. Therefore, the company reported adjusted earnings of – .6 5.62 below the consent of usted 5.67. Management estimates that the cash burn ranges from 250 250 million to 29 290 million monthly. To counter that, RCL said it had પ્રવા 7.7 billion in liquidity at the end of September. These include 300 300 billion in cash in cash and 700 700 million in credit available through the credit facility. The total liquidity at the end of Q3 was more than 9% below the end of Q2. Since the end of the third quarter, RCL has added more than cash 1 billion in cash to its cash position by selling 500 million senior notes and stocks, with an additional 8.33 million shares of 60 each placed on the market. In his note on the Royal Caribbean, Montour wrote, “[We] OW-rated is the most creative on RCL, which we believe is a very attractive set of demand drivers … its massive investments in premium new hardware, as well as consumer data, all set RCL to move the industry forward in a well-revenue metric Is. , Margins and ROIC in the long run. Montour supports its overweight (i.e. buy) rating with a price target of Over 91. This figure represents a 30% side-by-side probability of 2021. (To see Montour’s track record, click here) Is the rest of the street in the contract? As it turns out, the analyst’s consent is more of a mixed bag. 4 buy ratings and 6 holdings give RCL a moderate buy position. Meanwhile, the stock is selling at .5 69.58 per share, which is slightly below the price 68.22 average price target. (See RCL Stock Analysis on Tiparenx) Norwegian Cruise Line (NCLH) With a market cap of 7.45 billion and a fleet of 28 ships, the Norwegian cruise line has found its relatively small size as an advantage during this epidemic. With smaller and newer fleets, overhead costs, especially ship maintenance, were lower. These advantages do not mean that the company has avoided the storm. Earlier this month, the Norwegian announced the postponement of its travel policy, which would cover all scheduled passengers from January 1, 2021 to February 28, 2021, and selected travel in March 2021. Norwegian revenue is lower since the cancellation – in the third quarter, the top line was 5 6.5 million, up from 1. 1.9 billion in the same quarter a year earlier. The company also reported burning cash of million 150 million per month. Norwegian Rwana, in November and December, took steps to improve liquidity to cope with cash burning and minimal income. The company had a balance of 75 507550 million in senior notes, during November, 8.8% 75% and in 2026 and closed the general stock market earlier this month. The share offer is ડો 20.80 per 40 million shares. Together, the two offerings raised ડી 1.6 billion in new capital. On a more positive note, the Norwegian is preparing to finally resume full services. On December 7, the company announced that it has partnered with Atomus Air Solutions to install air purification systems on all 28 ships in its current fleet, using well-known filtration technology to defeat coronavirus. And sum up the bottom line: “This relatively new, high-distance, brand / ship footprint together will generally assume that it is in a good position to drive price growth, even though its demographic growth is leading to older consumers. The stretch will last until 2021. Ultimately, NCLH is a high quality asset in the Broader cruise industry, with a high beta for cruise recovery, and the industry returns and investors should see it in effect as they see more of the risk spectrum. “Montour gives the stock a price target of કિંમત 30 and more weight (i.e. buy). Their target indicates a 27% uptrend in a one-year period frame. This is the second cruise line bought moderately with the consent of a Wegian Rwian analyst. , Based on 4 hold and 1 sales set.As per RCL above, the share price here is currently $ 23.55 above the average price target, .2 23.22. (See NCLH Stock Analysis on Tipperenx) The world’s largest cruise line, with a market cap of 23 23.25 billion, has more than 100 ships and more than 700 destination ports under its brand.In normal times, this huge move has benefited the company; This is evident from the financial Q3cashburn, which reached close to $ 7070 million. Like other major cruise companies, Carnival has extended the length of its cancellations, or, in company terms, ‘paused in operation’. One of the carnival’s brands, Cunard Line, Queen Mary 2 and Queen Elizabeth Has canceled the trip in early June of next year. Carnival also canceled operations from the ports of Miami, Galveston and Canaveral in February, and postponed the inaugural voyage of the new ship Mardi Gras at the end of April 2021. These measures were taken in compliance with coronavirus restrictions. And a lot of revenue is being lost this year. The stock is down 60% year-to-date, despite some recent price rallies since the end of October. Revenue fell to just million 31 million in the third quarter of the fiscal year recorded in September. Carnival reported a loss of about 3 3 billion that quarter. The company completed an impressive tool to tackle trouble with more 8 8 billion in available cash in the third quarter. This combination of strength and weakness gave Montour a neutral (i.e. hold) rating on CCL’s stock. However, its 25 target target suggests a potential sugges of 23% .In a comment on Carville, Montour wrote, “[We] It is believed that the relatively high yields due to its large size in 2018-2019 are likely to be the other side of the crisis. , And geographical diversity, we see it as a company with minimal losses over the next few months and not surprised by its recent operations. We believe this will return in 2H21. Overall, Carnival has a unanimous analyst hold rating. This rating is based on 10 reviews, including 1 buy, 8 hold and 1 sell. The stock sells for 20.28 dollars and its .8 18.86 average price target indicates a negative probability of 7%. (See CCL Stock Analysis on Tiprank) To find good ideas for trading stocks at attractive valuations, visit Tiprank’s Best Stock to Buy, which unites all of Tiprank’s equity insights. Disclaimer: The views expressed in this article are those of the distinguished analysts. Content is intended for informational purposes only. It is very important to do your own analysis before making any investment.
