Switching gears within the cruise line sector, Wells Fargo altered its ratings on Friday to favor Carnival Corporation (NYSE:CCL) over Norwegian Cruise Line Holdings (NYSE:NCLH). The firm elevated Carnival to an Overweight status while demoting Norwegian Cruise Line (NCLH) to Equal Weight.

Despite concerns over potential Middle East tensions impacting all cruise line stocks, the firm expressed confidence in upgrading CCL due to its high percentage of sailings commencing or culminating in Dubai/UAE. This location is perceived as relatively insulated from geopolitical issues compared to other areas in the region. Additionally, Wells Fargo highlighted CCL’s greater reliance on European passengers, who may display more comfort with Mediterranean/Middle East voyages compared to North American travelers. Looking forward, Wells Fargo foresees potential for increased earnings revisions for CCL; conversely, it expects NCLH to provide conservative guidance and suffer more from pricing compression.

Wells Fargo attributed a price target of $22 to CCL, calculated at 9X the 2025 EBITDA estimate, minus net debt, divided by fully diluted shares outstanding (including convertible notes). The firm established a price target of $18 for NCLH, based on 8.5X the 2025 EBITDA estimate, less net debt, divided by outstanding shares.

During Friday morning trading, Carnival (CCL) shares surged by 3.86%, while Norwegian Cruise Line Holdings (NCLH) experienced a 1.33% increase. The Seeking Alpha Quant Rating for CCL indicates a Strong Buy, whereas NLCH has a Hold quant rating.