Majestic Research

Travel Weekly

Cruise companies' share prices rebound

By Johanna Jainchill
Published: September 20, 2009

Royal Caribbean Cruises Ltd.’s share price has surged 200% over the last few months, after hitting its lowest point in more than a decade.

Carnival Corp.’s share price has also rebounded, by 44%, since the first quarter of this year, but it never fell as far as RCCL’s did.

On March 30, RCCL was selling for $7.70 a share. By Aug. 17, it had climbed to $16.17, and on Sept. 16 it surged to $23.79.

Carnival’s shares had fallen to $20.92 on March 30 and were back up to $28.25 on Aug. 17. Carnival’s stock price has since rebounded by 18%, and on Sept. 16 had climbed to $33.22.

The confidence from investors comes in tandem with the economy’s general uptick and signs of stabilization and improvement in cruise prices after falling to historic lows.

Majestic Research, a New York-based equity research firm, found that Carnival’s pricing was “beginning to show some sequential improvement” in the fourth quarter of this year, and that Royal Caribbean International’s upcoming ship, the Oasis of the Seas, “appears to be generating very strong pricing premiums.”

Majestic also noted that “the more expensive cruises, which had been facing greater pricing pressure, were starting to demonstrate pricing power as consumer confidence begins to return.”

Tim Conder of Wells Fargo noted that Carnival and RCCL recently have “meaningfully outperformed” the rest of the market.

And last week, Bank of America-Merrill Lynch reinstated Carnival and RCCL with “buy” ratings, which boosted their share prices.