Tourism and travel companies have seen their shares plummet over the past few weeks as fewer people choose to go on vacations due to the growing coronavirus outbreak.
While airlines have seen a significant decline in flights (especially in Asia), cruise lines have been arguably the worst hit out of all companies in the travel and tourism sector. With many cruise ships under quarantine, very few people are willing to take the risk of getting stuck on a boat with nowhere to go.
Shares of all the major cruise line companies, including Royal Caribbean (NYSE: RCL) and Carnival (NYSE: CCL), saw double-digit declines on Thursday.
Although many Wall Street analysts consider the major cruise line companies to have enough cash on hand to weather the “coronavirus storm” so to speak, that doesn’t mean they don’t think shares will fall even further. In the long-term, however, many analysts think that these companies can stage a comeback.
J.P. Morgan analyst Joseph Greff wrote on Thursday that he thinks Royal Caribbean to be the “best positioned” cruise line stock to handle this coronavirus-fuelled slowdown. Another large cruise line company, Norwegian Cruise Lines (NYSE: NCLH), has also seen significant losses, but Greff considers the smaller company to be in a better position due to its nimbleness and its relatively young fleet of ships. “Despite the near-to-medium-term overhand of COVID-19, we see value for patient investors,” he said about Norwegian.
Major cruise lines have said that many of their cruises, including those in Asia, could be completely suspended at least until April, with their earnings taking a significant hit in turn. Royal Caribbean said in February that the COVID-19 outbreak could eliminate 65 cents per share from its 2020 earnings, while Carnival and Norwegian said the virus could remove up to 65 cents and 75 cents per share off their earnings respectively.
All three companies have seen their shares plunge significantly on Thursday. Carnival fell by 14.1%, the lowest point seen since 2009, while Royal Caribbean fell by 17.1% in what was the biggest drop since over ten years ago. Norwegian also declined by 13.4%, with shares falling to the lowest point not seen since 2013.
At the moment, the total number of coronavirus COVID-19 cases has grown to just under 99,000, with there being almost 3,400 confirmed deaths so far due to the virus. While growth in countries like China seems to have slowed down, other nations have had an alarming surge in cases. South Korea, Italy, and Iran are all the second, third, and fourth countries with the highest confirmed coronavirus cases so far.
Royal Caribbean Company Profile
Royal Caribbean is the world’s second-largest cruise company, operating more than 60 ships across six global and partner brands in the cruise vacation industry. Brands the company operates include Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises, and Silversea. The company also has a 50% investment in a joint venture that operates TUI Cruises and a 49% stake in Pullmantur, allowing it to continue competing on the basis of innovation, quality of ships and service, variety of itineraries, choice of destinations, and price. – Warrior Trading News
