Truist’s Patrick Scholes explains why he’s dovish on the cruise stocks

Carnival, Norwegian, and Royal Caribbean stocks have recovered roughly 20% each since last week, but Truist Securities’ Patrick Scholes continues to see them as “not” a smart pick for 2022.

Scholes defends his dovish stance on CNBC’s ‘Squawk on the Street’

Scholes warns that the cruise companies are still facing “structural issues” that are likely to weigh on the stocks. Defending his dovish stance on CNBC’s “Squawk on the Street”, he said:

Scholes attributes the boost in cruise stocks over the past week to recent post-earnings comments from the managements that bookings were strong for the next year. For 2022, though, the outlook remains uncertain, he added.

What else could be a challenge for cruise lines this year?

Amidst the highly contagious variant of the Coronavirus, cruise lines are bound to only accept guests that are fully vaccinated at present, which Scholes sees as another headwind for these stocks. He said:

Scholes rates all three stocks; CCL, RCL, and NCLH, at “hold”. His current price targets, however, translate to a more than 10% downside in the first two but a similar upside in the last.