|Bid||1,102.50 x 0|
|Ask||1,104.00 x 0|
|Day's range||1,015.83 - 1,109.50|
|52-week range||581.00 - 4,079.00|
|Beta (5Y monthly)||1.96|
|PE ratio (TTM)||4.05|
|Earnings date||18 Jun 2020 - 22 Jun 2020|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||20 Feb 2020|
|1y target est||68.94|
A member of Carnival Cruise Lines' board recently bought $10 million worth of shares. Saudi Arabia is in, too. Should investors match their confidence?
Volatility continues to be the name of the game for cruise line stocks in May, and Thursday's trading is no different. Today, the catalyst for shares surging was a Credit Suisse analyst initiating relatively positive coverage on cruise line stocks. Shares of Norwegian Cruise Line (NYSE: NCLH) jumped as much as 12.3%, Royal Caribbean (NYSE: RCL) was up 10.7% early in trading, and Carnival (NYSE: CCL) rose 6.9%.
The cruise ship industry has been tempest-tost as the COVID-19 pandemic shipwrecked the stocks of Carnival (NYSE: CCL), Norwegian Cruise Line (NYSE: NCLH), and Royal Caribbean (NYSE: RCL) over the last three months with losses of 60% or more. Chaiken initiated coverage on Carnival, Norwegian, and Royal, though he sees the latter two cruise lines as better investments.
If you believe one Wall Street pro, Royal Caribbean (NYSE: RCL) is the most attractive stock in the battered cruise ship sector. An analyst at Wedbush this week called it a worthy buy compared to peers like Carnival (NYSE: CCL) and Norwegian Cruise Lines (NYSE: NCLH).
Royal Caribbean Cruises (NYSE: RCL), the parent company of such cruise line brands as Royal Caribbean International, Celebrity Cruises, and Silversea Cruises, announced Wednesday that "given ongoing global public health circumstances [it] has decided to extend the suspension of most sailings through July 31, 2020." Royal Caribbean added that it expects to return to service on Aug. 1. The company's move does not appear to be prompted by additional guidance from the U.S. Centers for Disease Control and Prevention (CDC).
The country's second-largest cruise line continues to show why it's the most seaworthy of the three troubled players in this market.
The cruise ship industry is getting a major haircut from an analyst at investment firm SunTrust Robinson, who says we may not have seen the bottom of Carnival (NYSE: CCL), Norwegian Cruise Line (NYSE: NCLH), and Royal Caribbean (NYSE: RCL) shares. Analyst C. Patrick Scholes lowered his price target on Carnival 27% from $51 to $37, on Royal Caribbean 38% from $164 to $102, and on Norwegian Cruise Line 32% from $66 to $45.
After soaring on Monday, cruise ship stocks pulled back a bit on Tuesday. Shares of Carnival (NYSE: CCL), Royal Caribbean (NYSE: RCL), and Norwegian Cruise Line Holdings (NYSE: NCLH) fell 4.1%, 3.6%, and 3.5%, respectively.
(Bloomberg Opinion) -- Is this what normal life looks like?Somehow, my home country of Australia has managed to avoid the worst ravages of the coronavirus. Fewer than 100 people have died, and it’s now been a month since more than 50 cases were reported on any one day. More than a million tests have been conducted — in a population of about 25.7 million — and less than one in a hundred of those have shown an infection. Local transmission has been slight, with more than 60% of cases acquired overseas. Across the country, just 12 people are now in intensive care with Covid-19.Life is gradually returning to some semblance of what it once was. My children have been attending school one day a week and they’ll be back full-time Monday. We’ve been round to several friends’ houses, and over the weekend I cycled with my family to the shores of Sydney Harbour. The hundreds that we passed were doing a decent job of keeping their distance, but I’d be lying if I said we never came within the regulation 1.5 meters of anyone. After eight weeks of caution, you could see people start to magnetize into each other’s physical spaces. I should be feeling happy that my country seems to be emerging from the shadow of a pandemic without the terrible toll of death and disease paid elsewhere. In truth I have a sense of creeping dread. I find it hard to believe we won’t be looking back at this moment in two months, wondering how none of us saw what was coming. It’s impossible to know whether Australia has so far escaped the virus from skill or luck, but it’s hard to argue we did everything right. The day after the World Health Organization finally declared a pandemic in mid-March, Prime Minister Scott Morrison was still boasting about how he was planning to see his favorite rugby league team at Sydney’s 83,500-capacity ANZ Stadium. About one in 10 cases here stem from the moment the following week when Carnival Corp.’s Ruby Princess was allowed to disembark more than 400 sick passengers in the middle of the city. State and federal governments are still arguing about who was responsible for failing to enforce quarantine.That mirrors the sense of randomness experienced around the world, as my colleague Joe Nocera has written. Some places, like Lombardy, New York and the U.K., have seen devastating, society-straining outbreaks. Others in superficially similar circumstances, like Campania, Florida and Germany, have been spared the worst. Despite more than 23,000 scientific papers written on Covid-19, the breadth of what we don’t know is astonishing. It’s still unclear how much the virus is able to spread through the air; which types of surfaces it can best survive on, and for how long; what role children play in transmitting the disease; how long those who’ve been infected retain immunity; and even how many have been infected.Knowledge isn’t a prophylactic on its own. Robert Koch revolutionized our understanding of infection when he identified the causative agent of tuberculosis in 1882, but his attempts to develop a vaccine were an ignominious failure. The bacterium still kills more than a million people a year.That means Australia may be no better placed to handle a resurgence of infections than the northern hemisphere countries that failed to learn lessons from China.We’ve long been aware that pandemics spread in waves, with the subsequent outbreaks often far worse than the initial surge of infections. About 108 million people are under renewed lockdowns in China’s three northeastern provinces, while initial success in containing the disease has given way to fresh outbreaks in Singapore and South Korea. The impossibility of maintaining a heightened state of vigilance in the long term may be one of the greatest risks ahead of us, as my colleague Clara Ferreira Marques has written.The role of heat and humidity — a subject of particularly passionate debate — is probably what worries me most, living in one of the southern hemisphere's few temperate countries. Of the 17 nations with more than 50,000 confirmed cases, only Brazil and India have been outside the temperate, arid and high-altitude zones that a climate-based model would suggest are most likely to encourage infection. For much of the world, where spring is gradually turning to summer, seasonal variation in Covid-19’s reproduction rate would offer the prospect of a welcome slowdown in the coming months. Here in Australia, though, a mild fall is now giving way to the first bite of winter. As I step into the cool afternoon air onto a main street that’s as busy as I’ve seen it in months, that’s not a comforting thought.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
There's a chance the stock could go back up if you extend your time horizon far enough, but you need to acknowledge a really bad possibility in the meantime.
(Bloomberg) -- As the Federal Reserve pulls out all the stops to bolster credit markets, corporate America is gorging on debt.From Carnival Corp., Marriott International Inc. and Delta Air Lines Inc. to Gap Inc. and Avis Budget Group Inc., many of the companies hardest hit by the coronavirus outbreak have priced billions of dollars of bonds and loans in recent weeks.Never mind that profits have been wiped out, and that their business operations aren’t viable right now or likely anytime soon. As long as they’re propped up by the Fed, investors are willing to lend.Yet as expectations of a V-shaped economic recovery vanish rapidly, more and more industry veterans are starting to express concern about these debt dynamics. Some warn that the Fed is putting credit markets on course for a future wave of defaults that makes the current stretch of corporate bankruptcies look timid by comparison.Others see an outcome even more dire.In this scenario, they say, moribund companies in industries deeply scarred by the pandemic will just keep borrowing. Market watchers such as Deutsche Bank AG chief economist Torsten Slok fear that a new breed of so-called zombie companies -- firms that don’t earn enough to cover interest payments and are kept alive in part by central bank largess -- could have profound and painful consequences for everyone from workers to investors for years to come.“The Fed and the government are interfering in the process of creative destruction,” Slok said in an interview. “The consequence is that we are at risk the longer this persists –- companies being kept alive that would otherwise have gone out of business -- that it will begin to weigh on the overall potential for growth of the economy and on productivity.”It’s not that these risks mean the Fed’s current policy tack is misguided. Given the scope of the economic collapse and the unprecedented spike in unemployment that has accompanied it, most analysts say policy makers had to throw everything they could at the problem. It’s just that such dramatic intervention comes with great risks that will have to be addressed down the road.“The Fed had no other choice than to do what it did,” Slok said.Still, it’s precisely this dramatic intervention that’s emboldening money managers to take greater chances and seek fatter returns.“You can’t say ‘we’ll do whatever it takes’ and not do it,” said Jack McIntyre, who helps oversee about $60 billion at Philadelphia-based Brandywine Global Investment Management. “Otherwise, the Fed will lose credibility.”McIntyre said he’s buying select investment-grade corporate bonds in lieu of Treasuries “because the Fed has backstopped the market -- if spreads widen, the Fed will step in.”That’s just the sort of sentiment that can ultimately lead to the proliferation of zombies, economists say.Fed BackstopThe actual definition of what makes a company a zombie varies depending on who you ask, but most agree that it’s generally meant to encompass firms that can’t cover their debt servicing costs from current profits over a select period.A snapshot of the market reveals no shortage of companies that would fit that description should the economic rebound take time to gain momentum.Earnings for companies, excluding financials, in the S&P 500 are forecast to drop a staggering 42% in the second quarter from the previous year as the full effect of global lockdowns are felt, according to estimates compiled by Bloomberg.At the same time, net corporate debt issuance has ballooned, and could approach as much as $1 trillion this year, according to Bloomberg Intelligence.Delta and Marriott declined to comment, while Avis didn’t respond to requests seeking comment.Carnival referred Bloomberg to a press release highlighting the strength of its balance sheet and continued customer bookings for the second half of the year and 2021.A representative for Gap directed Bloomberg to a statement noting its financing and cash preservation efforts, adding that the company plans to have 800 stores open by the end of May.If the pace of the recovery is quick enough, corporate-bond buyers say plenty of hard-hit companies should be able to turn things around.But the question on the minds of investors and economists alike is: how long will the Fed be willing to support firms via its pledge to buy corporate debt if the recovery is slower to develop than expected?“The government has done more than I could have imagined to allow businesses to access capital, and if the markets shut down again the government will do even more,” said Bill Zox, chief investment officer of fixed income at Diamond Hill Capital Management, which manages around $19.5 billion.Borrowing BingeIt’s an especially salient question when it comes to the sectors hardest hit by the Covid-19 outbreak.Cruise lines have borrowed more than $8 billion via the bond market in recent weeks, selling notes secured by everything from ships to islands. Airlines, for their part, have gotten more than $14 billion in new financing from banks and investors, even as the vast majority of flights remain grounded.“We have entire industries that are going to be protracted long-term if not permanently disrupted because of this,” said Vicki Bryan, a veteran credit analyst who runs Bond Angle LLC. “The cruise industry is ripe for elimination of companies. It should logically renounce the weaker players but that’s not happening because we have dirt-cheap money that we’re willing to throw back into the market from the Fed.”Beyond just lending them money, creditors are also waiving or loosening financial markers on existing debt, allowing companies that have seen revenue dry up stave off potential tumult.Vail Resorts Inc. -- owner of the eponymous winter vacation destination -- was granted a two-year reprieve on key debt covenants last month, paving the way for the company to raise $600 million with a new bond offering. Marriott, one of the world’s largest hotel chains, struck a similar agreement with lenders.A representative for Vail said that the company’s bank covenant waiver provided additional flexibility given the short-term dislocation from Covid-19, and that it remains confident in the long-term outlook for both profit and cash flow.‘Catch-22’Yet amid the waivers, lenders are extracting higher interest rates or other concessions.Norwegian Cruise Line Holdings Ltd., AMC Entertainment Holdings Inc. and Avis all paid double-digit yields to borrow in recent weeks. That could depress their capacity to make capital expenditures and adapt to shifting consumer tastes as the coronavirus changes how people spend money.“Taken together with margin contraction and leverage that was already near record highs, you may end up with a corporate sector that has less capacity to invest in growth,” said Noel Hebert, director of credit research at Bloomberg Intelligence.Norwegian has a “long-standing track record of strong financial performance which includes over a decade of financial growth,” a company spokesperson said in an emailed response to questions. “The cruise industry has been hit the hardest by Covid-19 as our operations have been completely shut down, which certainly impacts us in the short-term but has no bearing on our long-term success.”AMC didn’t respond to requests seeking comment.Read more: Corporate debt loads are growing fast as Fed opens up spigotsSome say as successful as the Fed has been boosting credit-market liquidity, the support is only temporary, and will result in a wave of distress when it steps back.“There will be plenty” of debt defaults and bankruptcies when corporate borrowers start running out of cash in the months ahead, Howard Marks, co-chairman of Oaktree Capital Group, said in a Bloomberg TV interview. “There are large, highly levered companies and investment vehicles that the government and Fed rescue program is not likely to reach and take care of.”Others see central-bank intervention keeping companies alive for much longer, crowding out investment and employment at healthy firms, similar to what occurred in Japan during the nation’s ‘lost decade’ of the 1990s, where the ‘zombie company’ term was first applied.“You are misallocating capital to businesses that are not productive and in some sense taking resources away from companies that have high growth,” Deutsche Bank’s Slok said.The repercussions may only become apparent years from now, according to Marc Zenner, a former co-head of corporate finance advisory at JPMorgan Chase & Co.“It’s hard for me to think that something like that doesn’t have a cost,” Zenner said. “What you’ll see is some of these costs will probably only emerge years later. Are we going to have reduced capacity to act? Is it that other economies will be less burdened and will attract more capital? Is there another crisis that will come because of this misallocation of capital?”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Carnival Corp. was cut to junk by Moody’s Investors Service amid a prolonged suspension of the cruise company’s operations because of the Covid-19 pandemic.Moody’s assigned the company a Ba1 rating, the highest junk grade, and lowered its rating on Carnival’s senior unsecured notes by one notch to the same level. It said in a statement Monday that Carnival’s financial metrics “are not indicative of an investment-grade rating for the foreseeable future” as cruises remain suspended and any recovery is likely to be slow.The credit grader said it expects sailing to be suspended beyond the current July 24 no-cruise order issued by the Centers for Disease Control and Prevention. Ship capacity will be “modest” in 2020 and early 2021, hurting profitability, Moody’s said.Carnival still carries investment-grade ratings from S&P Global Ratings, though it said it was considering downgrading the cruise line. A second junk rating would make Carnival a “fallen angel” and mean its debt would be dropped from investment-grade bond indexes.Miami-based Carnival said last week that it plans to cut jobs, reduce salaries and shorten work weeks to cope with the suspension. Last month, the company netted $6.4 billion from new bonds, senior convertible notes and common stock to help it weather months without customers.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Shares of cruise line operators Carnival (NYSE: CCL), Norwegian Cruise Line (NYSE: NCLH), and Royal Carribbean (NYSE: RCL) were all soaring by double-digit rates Monday morning. Carnival opened 11% higher today and Norwegian and Royal were up 15% each. A series of positive developments inspired hope among cruise ship investors that the worst may be behind the industry and they could extend their rally for a third consecutive trading day.
No industry has gotten hit harder by the coronavirus pandemic than cruise lines. The three major cruise lines, Carnival (NYSE: CCL), Royal Caribbean (NYSE: RCL), and Norwegian Cruise Lines (NYSE: NCLH), have all been forced to dock their ships due to the coronavirus pandemic, and the trio of stocks remain down about 75% since February, despite bouncing aggressively off their lows in recent weeks as some investors spy opportunity for a comeback. It's easy to see why the pandemic is such a nightmare for the industry.
All three cruise line stocks moved lower as layoffs and problematic quarterly results offset improving liquidity snapshots.
Shares of Norwegian Cruise (NCLH) are down 80% year to date, but one analyst says the impact of COVID-19 is priced in, and see the stock “as materially undervalued” if cruises rebound going into 2021.
Shares of cruise giant Carnival Corporation (NYSE: CCL) popped nearly 7% in early trading Friday before seeing those gains cut about in half. As of 1:05 p.m. EDT, however, Carnival stock was still up a good 3.5%. As Reuters reports this morning, Carnival plans to lay off 820 employees in Florida, and furlough a further 537, as the company remains under CDC-imposed restrictions laid down in a "no-sail" order that was extended in April.
Despite the fact its cruise ships will resume sailing Aug. 1, Carnival (NYSE: CCL) is permanently laying off at least 820 employees in the state of Florida, while putting 537 more on furlough for six months as a cost-cutting move. Together, the terminations and furloughs add up to almost 46% of the 3,000 Carnival employees who work in the Sunshine State. More workers will also be laid off in California and Washington state, though Carnival has not yet indicated how many.
Carnival (NYSE: CCL) has sounded a cautiously optimistic tone about its business in recent weeks. The cruise ship leader has also seen robust demand for the new debt it issued to help it navigate through a prolonged period of paused sailings. Carnival has added $6.4 billion of extra cash to the books since late February.
The prospects for local reopenings are good for ailing retailers, but for cruise ship stocks, challenges linger on. Facing an ongoing no-sail order and concerns about how the industry will be able to adapt to post-coronavirus realities, Royal Caribbean (NYSE: RCL), Norwegian Cruise Line Holdings (NYSE: NCLH), and Carnival (NYSE: CCL) have all faced major declines in 2020 as their very existence has been called into question. One of the biggest fears about cruise ship companies is that they won't be able to find a way to return to normal operations as long as there are any worries about COVID-19 or other health concerns.