Morgan Stanley issued generally bearish notes on cruise operators Carnival Corporation (CCL) and Royal Caribbean Cruises (RCL). The investment bank upgraded CCL to Equal Weight but sharply cut its price target on Royal Caribbean (RCL) and urged investors to avoid the sector.

An aerial view of a luxurious cruise ship, surrounded by the blue horizon.

Morgan Stanley's gloominess on the cruise space's outlook contrasts with Stifel, which remains bullish on RCL.

Morgan Stanley's Bearish Calls

Morgan Stanley upgraded CCL to Equal Weight from Underweight because it believes that the name's risk/reward ratio has become more balanced after its recent decline. However, the investment bank still recommends that investors avoid the sector altogether if a recession materializes.

Specifically, Morgan Stanley is worried that the demand for cruises will drop due to the economy's struggles amid the tariffs that the Trump administration has imposed. The investment bank also noted that its economist had reduced his forecast for U.S. GDP growth.

The investment bank cut its price target on RCL to $220 from $270 but kept an Equal Weight rating on the shares.

Stifel Is Bullish on RCL

On April 8, Stifel lowered its price target on RCL to $265 from $310 but kept a Buy rating on the shares. The investment bank identified RCL as a "best-in-class" name that should enable it to outperform its peers even if the economy deteriorates.

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Disclosure: None. This article is originally published at Insider Monkey.