For the cruise industry, Europe will be the place to be in 2026 with an oversaturated Caribbean market and potential end to the war in Ukraine positioning operators like Carnival (CCL) and Viking (VIK) to outperform rivals.
“Our view is that operators with significant European exposure should benefit versus Caribbean-focused operators,” said Jefferies’ David Katz, who is bullish on the entire cruise industry, but points to certain names that will outperform in 2026 on both favorable geopolitical developments, and operational excellence.
Carnival Corp (CCL) remains Katz’s Top Pick in Leisure thanks to its improving business quality and minimal capacity growth.
“We believe that disciplined capacity growth from the world’s largest operator is prudent, as Carnival can focus on same-ship pricing growth through targeted marketing spend. Furthermore, we see Carnival as significantly undervalued, both versus peers and versus its own historical levels,” Katz says, reiterating his Buy rating on Carnival Corp (CCL).
Despite its heavy presence in the Caribbean, Carnival enjoys European-focused brands, including the company’s historical relevance in St. Petersburg, Russia, one of the top global cruise destinations, pre-war, and one that will benefit from an end to the Ukrainian conflict.
Similarly, Viking Holdings (VIK) will also benefit in 2026 from its European-centric itineraries as well as an upper-income consumer. Katz believes Viking’s (VIK) performance should allow for “at least $500M in capital returns through year-end 2027 alongside a sub 1.0x leverage profile.”
“Despite the strong performance of the stock in 2025, it is clear to us that the business quality and growth trajectory remain,” Katz says, upgrading Viking (VIK) to Buy from Hold with a 33% bump in his price target to $80.
Katz anticipates “industry-leading” net yield growth of 5% in FY26 and 4% in FY27 and high-teems adjusted EBITDA growth in FY26-FY27 for Viking (VIK).
As Europe emerges as the focal point for the cruise industry, Norwegian Cruise Line’s (NCLH) decision to reposition 10% of its European-based fleet to the Caribbean not only seems like an ill-timed decision but is likely to interrupt normal bookings and result in yield headwinds as the company employs short-term discounting to achieve occupancy targets.
Furthermore, NCLH is also pivoting towards “premium families” to boost occupancy levels, which implies another pressure point on pricing. And despite “admirable cost-control efforts,” a likely slowdown in net yields next year “dims our expectations for a near-term turnaround in leverage progress.”
Accordingly, Jefferies’ Katz downgrades Norwegian (NCLH) to Hold from Buy and lowers his target price by 23% to $20.
Finally, Royal Caribbean (RCL) remains a Hold as the company remains a “high quality operation” with a strong management team and business model. However, strong tailwinds from land-based assets will likely be offset by pricing softness expected to emerge in 2026, while Norwegian’s (NCLH) Caribbean shift will be felt more acutely at RCL than peers.
For 2027, Katz sees stronger growth for RCL as more land-based assets come fully online such as Royal Beach Clubs in the Bahamas, Santorini, and Cozumel, while longer term, Royal Caribbean’s (RCL) lead in technology lead and innovation will continue.
Shares of Royal Caribbean (RCL), Carnival Corp (CCL), Viking Holdings (VIK), and Norwegian Cruise Line Holdings (NCLH) are all trading ~3% higher on Monday with Royal Caribbean (RCL) slightly outperforming.