Wall Street analysts see a travel booking boom. Here are their favorite picks to play it

Published Tue, Mar 16 20218:32 AM EDT

Wall Street is getting increasingly bullish on a return to normal travel in the U.S. following the pandemic, and some cruise and airline names will cash in on the pent-up demand. Goldman Sachs and JPMorgan are raising their expectations for travel this year and hiking price estimates on a handful of airlines and cruise lines. The two groups were some of the most punished stocks during the pandemic, which evaporated demand for the travel industry. Goldman cited improving TSA demand, after air travel over the weekend hit its highest level in more than a year as the Covid-19 vaccine rolls out and Americans return to vacationing. The firm also said the easing of various government restrictions and strong demand trends in Goldman's "pent-up demand" scenario are driving the price target hikes. Airline stocks have run up a ton this year and since the bottom last March as the market started pricing in the reopening trade. Still, all of Goldman's coverage is trading at a discount to historical price-earnings multiples while the S & P 500 trades at a premium to its historical average. Goldman raised its price targets on buy-rated Alaska Air Group , JetBlue , Southwest, SkyWest and United Airlines . Take a look at the price target changes here. Goldman hiked Alaska Air Group's price target to $90 per share from $64 per share, the highest on Wall Street. "We continue to see ALK shares as the best risk/reward in our coverage given its industry-leading balance sheet, unique cost tailwinds, and its significant exposure to domestic, leisure demand which we expect to be the fastest end market to recover," Goldman Sachs equity analyst Catherine O'Brien told clients. Goldman has a neutral rating on American Airlines , Allegiant Travel Company , Delta Air Group and Spirit Airlines , but raised its price targets on all the listed stocks. Goldman has a sell rating on Hawaiian Holdings . Similarly, JPMorgan is getting more bullish on cruise travel for the year. "We are bullish on the industry's pending recovery, owing to what is expected to be a strong U.S. consumer spending environment, sizable pent-up leisure travel demand, already inflecting cruise bookings, several cruise-specific catalysts over the near term, and a reasonable case to be made for higher ticket prices, which we don't think is priced in," JPMorgan equity analyst Brandt Montour told clients. JPMorgan raised its price target for the three major cruise lines based on an expected upward move in ticket pricing. JPMorgan hiked its price target on overweight-rated Norwegian Cruise Lines to $36 per share from $33 per share and Royal Caribbean Cruises to $110 per share from $100 per share. The Wall Street firm raised its target on Carnival to $33 per share from $23 per share, but kept its neutral rating on the stock. "We expect the three public U.S. companies' shares to trade more or less together," said Montour. "Of the three, we continue to prefer RCL, based on longer term brand and operating momentum, but also acknowledge CCL's preferable diversification over the near term." — with reporting from CNBC's Michael Bloom.

A JetBlue Airways plane taxis next to American Airlines, Delta Air Lines and Alaska Airlines aircraft at Reagan National Airport (DCA) in Arlington, Virginia, on Monday, April 6, 2020.

Andrew Harrer | Bloomberg | Getty Images

Wall Street is getting increasingly bullish on a return to normal travel in the U.S. following the pandemic, and some cruise and airline names will cash in on the pent-up demand.