Norwegian Cruise (NCLH.US) and Royal Caribbean (RCL.US) were boosted by Citigroup, driving the sector higher before the market open.

Citi is bullish on Norwegian Cruise (NCLH.US) and Royal Caribbean Cruises (RCL.US). Shares of Norwegian Cruise rose nearly 4% before the market opened, while Royal Caribbean Cruises rose over 2% before the market opened. Carnival Cruises (CCL.US) and Viking Holdings (VIK.US) also rose before the market opened.

Citi upgraded Norwegian Cruise to "buy" from "neutral." Citi noted the stock has significant potential for earnings growth and multiple expansion.

Citi analyst James Hardiman said the company's strategic shift gives the firm confidence that the significant pricing opportunity will not be offset by out-of-control costs. Hardiman estimates the cruise operator's three-year compound annual growth rate of earnings per share is 23%. If Norwegian Cruise can maintain its 2.5% earnings/cost differential target, the EPS growth rate could reach 30%.

Citi also added Royal Caribbean Cruises to its list of positive catalysts to watch, expecting the company's upcoming earnings report to include an update on its long-term strategy.

Norwegian Cruise has only risen 4% this year, while Royal Caribbean Cruises has risen nearly 42%.