Carnival will report third-quarter earnings before trading opens on Tuesday, but it was a competitor that received upgrades on Monday.
Deutsche Bank and Bank of America each upgraded shares of Royal Caribbean Group to Buy, with the latter calling it a "high quality business."
While Deutsche Bank kept its price target of $299 unchanged, the firm noted that Royal Caribbean stock has pulled back dramatically since Aug. 5 and at current price levels shares offer a "considerably more favorable risk/reward" profile.
Bank of America analyst Andrew Didora, meanwhile, upgraded the stock to Buy from Neutral and maintained a $330 price target.
Didora said in the research note that he also likes the possible entry point into the stock after the 26% decline since Aug. 5.
The analyst said that Royal Caribbean is a "high-quality business" and that the recent investment in Sandals Resorts could generate $900 million of earnings before interest, taxes, depreciation, and amortization, or Ebitda, growth in 2030.
"The macro is a risk, but travel spend has been very strong, estimates seem reasonable, and RCL is well positioned to capture further travel share," Didora said.
Royal Caribbean stock fell a fraction to $242.43 on Monday after ending Friday up 1.6% at $242.70. Carnival stock declined 0.6% to $22.10. Among other cruise line stocks, Norwegian Cruise Line and Viking Holdings each dropped around 1.5%.
With the share price decline Royal Caribbean stock was down about 13% this year and has dropped sharply below both its 50-day moving average and its 200-day moving average.
While Wall Street views Royal Caribbean's current price level favorably, Carnival earnings on Tuesday will be a test for the whole cruise line sector. Cruise line operators this year have had to navigate higher fuel costs brought on by the U.S. war with Iran, a hantavirus scare, and a geopolitical environment that's keeping more travelers close to home.
The largest issue for the sector could be higher fuel prices as U.S. negotiations with Iran to bring an end to the conflict remain uncertain.
Wall Street expects Carnival to post adjusted earnings of $1.35 a share, down from $1.43 a year ago, on revenue growing 3% to $8.39 billion, according to FactSet.