The cruise business will not have the majority of its fleet operational until the second half of next year, according to new estimates from UBS.
The prediction came even as analyst Robin Farley offered an improved outlook for the sector.
Farley, a leading analyst covering the cruise sector, lifted price targets for shares of Carnival Corp, Royal Caribbean Group and Norwegian Cruise Line Holdings — the big three shipowners in a sector that remains nearly paralysed by the coronavirus crisis.
She also hiked her earnings estimates for the New York-listed trio.
But she said in a note to clients that in the first quarter of 2021, just 15% of the fleet is expected to be operational.
That should rise to 35% in the second quarter, but the ships will operate at just 50% occupancy.
In the second half, 75% to 80% of cruise vessels will be in service at 70% occupancy levels, Farley predicted.
The new outlook saw Farley push back her predictions for cruise recovery by a quarter, as she previously expected to see 15% of the cruise fleet in operation in the last three months of this year.
Ray of hope
But there are reasons for some optimism in the sector.
"While exact timing of a vaccine remains unknown, we believe cruise lines, as a pure leisure industry, will see better demand recovery than business travel," Farley wrote.
But UBS' outlook is far from bullish.
Farley hiked her price target on Royal Caribbean shares to $75 from $60, with the new target implying a premium of just 7% on the latest closing price for the Miami giant's shares.
The company is the only cruise giant for which Farley has a "buy" rating, which the analyst tied to the advantages of Royal Caribbean's private island in the Bahamas.
Farley hiked her target on Carnival Corp stock to $17 from $15, while her 12-month outlook on Norwegian Cruise Line rose to $17 from a previous target of $12.
The analyst also pointed to expectations by cruise sellers that the sector would be boosted if the US Centers for Disease Control and Prevention requires rapid Covid-19 tests for all passengers before boarding.