Sector Snap: Analyst sees higher cruise prices

Nomura analyst predicts that cruise ships will raise prices as demand recovers

Associated Press

NEW YORK (AP) -- Consumers' increasing demand for cruise vacations should help prices for such trips rise this year, said Nomura analyst Harry Curtis.

Higher prices could mean higher profits for cruise operators, and help drive their stock prices in the next few months.

First-quarter bookings are up about 9 percent, suggesting that cruise demand is growing, he said, while prices are up 17 percent from their bottom in May.

For second-quarter trips, prices are up modestly, and should rise over the next three months as more people book trips, he said. Curtis expects this trend to continue later into the year as well.

His prediction would be good news for an industry that struggled for much of last year.

Cruise line operators entered 2012 thinking they could start charging passengers more again after offering widespread discounts following the 2007-2009 recession. But just two weeks into the year, 32 people died when Carnival Corp.'s Costa Concordia sank off the coast of Italy. Bookings slumped even as cruise companies lowered prices.

Based on those expectations, Curtis raised his price target for Carnival Corp. by $4 to $46. He also boosted his target for Royal Caribbean Cruises Ltd. by $4 to $44 and set a $30 price target for Norwegian Cruise Line Holdings Ltd., which went public last week.

In afternoon trading, Royal Caribbean shares rose 99 cents, or 3 percent, to $37.97, while Carnival's shares added 35 cents to $38.78. Norwegian Cruise shares lost 33 cents to $26.62.

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