Shares of cruise line stocks Carnival Corp. (CCL), Royal Caribbean (RCL), and Norwegian (NCLH) close lower on Tuesday as Morgan Stanley analysts slash their price targets, citing rising fuel costs in travel demand headwinds.
Yahoo Finance Live takes a closer look at several of Tuesday's trending stocks after the closing bell from the New York Stock Exchange. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
JOSH LIPTON: Morgan Stanley slashing price targets and earnings estimates for cruise lines. This coming amid higher fuel costs and currency headwinds. Shares of Norwegian, Carnival, and Royal Caribbean all in the red. That we should mention, Julie, I mean, some of these names have had some monster runs this year, too. They may be in the red, but I'm just looking at Carnival, for example, it is up nearly 60% this year. And most analysts cover that name still think you should own it.
But again, also, there a bigger idea that is the consumer to the extent they get a little nervous. And we even hear guests on today's show say, some believe that's going to happen. If you think that, then maybe consumer discretionary names could come under some pressure here.
JULIE HYMAN: Yeah. I mean, and two notes here. So you mentioned it's consumer discretionary names, which, as I said, is the worst performing group in the S&P 500 today. Cruise lines are part of the reason why. I think the question that has really come to the fore in investors' minds now with a lot of these companies, how long is it going to last?
You know, we have had the good times, as you mentioned, right? People have been traveling. People have continued to spend money. We talked to Kevin Mahn of Hennion & Walsh earlier in the show. And he was raising just that question, right? Are people savings starting to work down? Are they going to continue to have a job, get a raise at the same rate, et cetera?
And these are-- now, it might be that it will continue. It's continued longer already than a lot of people expected. But these questions are really, you know, one of the things--
JOSH LIPTON: Listen, it's why you're watching the labor market the way you are, right, because, at the end of the day, low unemployment sub-4% and strong wage gains, that's why you're waiting for any cracks in that market.
JULIE HYMAN: Yes. We're seeing a few cracks today, it feels like. One of the other places where we're seeing that manifest is in recently spun-off companies. So far-- and a lot of these spin-offs have been happening in just the past few days, right? So you've got Vestis Corporation, which was a spin-off from Aramark. The big food services company, this, I believe, is the apparel part of that. Veralto Corporation spun off from Danaher. And then WK Kellogg, of course, spinning off from Kellogg, which is now Kellanova.
And so all of these since we saw, the spin-offs have been underperforming. And, you know, I think there are some specifics with these companies. But I think there is also just this broader I don't want to take any risk in this market of attitude manifesting in the past few days.
JOSH LIPTON: Yeah, that's right. And also, listen, I mean, company can make its case about why a spin-off makes sense. I mean, Kellogg can say, look, we're going to spin off Froot Loops. And it's going to get narrow and focus and not distracted by the Eggo Waffles. That doesn't mean that the Street or investors are necessarily going to buy it or at least immediately.
JULIE HYMAN: Yeah, exactly. You know, maybe they wanted that growth that came with the snacks business that is not happening in the cereal business.
JOSH LIPTON: Yeah.
JULIE HYMAN: We'll see what happens.
JOSH LIPTON: And finally, Eli Lilly to buy radio pharmaceutical company Point Biopharma global for $1.4 billion. The acquisition aiming to expand Eli Lilly's oncology capabilities and next-generation radial gland therapies. And Eli Lilly, of course, Julie, has been on a tear this year. Of course, that's on the potential of weight loss drugs and Alzheimer's. But clearly, building out this oncology portfolio as well.
JULIE HYMAN: Yeah. And we see Eli Lilly shares moving down. On a day like this, it's tough to suss out what's from this deal versus what's from the overall downdraft. I did see a little chatter on the part of analysts that at $12.50 per share. This is sort of the upper end of the price that analysts were expecting. So perhaps some questions over the premium that Eli Lilly is paying in this case. And that might be contributing to some of the drop in the shares. But again, on a day like this, when so much of the market is down, it's tough to--
JOSH LIPTON: There's a lot of cross-currents. I will say, folks are also pointing out that Fusion Pharmaceuticals surging today. And that's a peer to Point Biopharma. So many people are trying to sniff out the next target.