Morgan Stanley is getting more optimistic on shares of Royal Caribbean after a rough patch of sailing throughout the pandemic. Analyst Jamie Rollo upgraded the cruise stock to equal weight from underweight, calling it the “superior cruise operator” coming out of Covid. “RCL looks higher 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 certain, Morgan Stanley stays cautious on the industry going forward, expecting pricing power to recuperate slower than other travel sectors on account of lingering Covid concerns and high growth in industry supply. Promotional activity my also persist in weaker demand areas, Rollo said. “Travel agent commentary continues to be mixed, with some agents reporting a great level of interest for 2023 itineraries and good momentum into the brand new 12 months, and others highlighting concerns around Covid/mask mandates after the rise in cases in China, an oversupply of inventory within the Caribbean, and continued economic/inflation concerns,” Rollo said. Together with the upgrade, Rollo raised his price goal on the stock to $50 from $40 a share. That is still about 13% below Monday’s close price. In the identical 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 goal 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 one other 12 months of losses in 2023 for the cruise company. — CNBC’s Michael Bloom contributed reporting
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