Cruise ship stocks are on the rise again

For the second day in a row, the cruise lines are running at full speed and racing out to sea. Yesterday, a better-than-expected earnings report from Royal Caribbean (NYSE: RCL) sparked a rally in the cruise line sector. The momentum has continued until this afternoon, with Royal Caribbean shares gaining another 4.3% through 12:15 p.m. EDT, Carnival Corporation (NYSE: CCL) lagging a little, up 3.6%, and Norwegian Cruise Line Holdings (Nasdaq: NCLH) rose a solid 6%. And yet, at the same time that individual investors seem to be becoming more optimistic about cruise stocks, professionals are becoming conservative. In today's news, two of Wall Street's biggest names have slashed their price targets for Royal Caribbean. Investment bank Stifel Nicolaus, TheFly.com, reports that Royal Caribbean has "ample" access to capital and is likely to get back into service at least "gradually" before the end of the year, and that it is maintaining its buy rating on Royal Caribbean shares . Stifel also notes (according to StreetInsider.com) that it is hoping to begin distributing a COVID-19 vaccine in the first quarter of 2021, which could accelerate a recovery. Still, the analyst has cut his price target from $ 85 per share to just $ 72 per share. Investment mega-banker JPMorgan is also lowering its price target for the share from $ 72 to just $ 67. Contrary to Stifel's optimism, JP warns that the cruise industry's recovery may be slower than previously forecast - which would mean that Royal Caribbean shares in particular would be worth less than the analyst had previously assumed. Granted, JPMorgan also believes Royal Caribbean shares will outperform the market and continues to recommend the shares for that reason. But there seems to be reason for caution here as even these bullish analysts imply the target cuts. In the past two weeks, two of the three major listed cruise lines have warned that they are using their cash at higher rates than previously assumed. Norwegian Cruise Line Holdings is now burning $ 160 million a month and Royal Caribbean between $ 250 million and $ 290 million. Given this trend, I wouldn't be surprised if Carnival reports accelerated cash consumption in its next update. Even assuming "ample" liquidity, it is not good to burn more money in the middle of a recession. Not to say too nicely, but it is a reason these stocks trade down rather than up.