Year to date, shares of Royal Caribbean are higher by 45 percent, Carnival is up by 30 percent and Norwegian is up 35 percent. So, what went wrong? Simply put, Goldman's analysts made multiple assumptions at the start of 2017 that were incorrect. For example, the analysts assumed the cruise sector would lag behind other forms of entertainment in the travel and leisure space and that a rebound in oil prices and inflation would hurt the industry as a whole.
To the analyst's credits, Royal Caribbean's commentary last December was conservative, Cramer continued. This could have led the analysts to conclude that the stock's valuation is rich as it was near the high-end of its historical range.
But that was then and this is now — as Goldman's analysts upgraded Royal Caribbean to Neutral last week and revised their price target on Carnival slightly higher but kept a Neutral rating. "The truth is the cruise business is on fire with Royal Caribbean generating some of the best numbers in the past five years while costs for the cruise lines are at record lows," Cramer said. "This was the last stock they should have downgraded." Related Links: Can This Leisure Group Cruise Higher? Cramer Thinks So Cramer Shares His Thoughts On Carnival And American Airlines© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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