If you think that it's too late to hop on one of this year's bigger gainers, you may want to see some of the faces boarding Carnival Corp. (CCL 1.76%) shares with you. A lot of Wall Street pros are either warming up to the world's largest cruise line stock or starting to feel more bullish despite this year's heady upticks.
The stock is up 82% so far in 2023. It probably helps that the stock peaked with a 143% year-to-date gain over the summer, so there is a real sense of opportunity here after the recent pullback. It's turning into a dinner bell for analysts. The siren song of a lavish midnight buffet at a relative discount may prove tempting for individual investors, too.
NYSE: CCL
Key Data Points
Making a splash
Thursday's analyst news finds Susquehanna putting out an encouraging note, combatting fears that leisure demand in general may be slowing. The analyst notes that Carnival and its cruising peers are still seeing healthy fares. There may be some pockets of weakness in other areas of the leisure travel market including theme park operators and low-cost airlines, but the longer booking curve for watery escapes bodes well for Carnival for now. Susquehanna is sticking to its bullish rating on the stock with a $17 price target.
Another analyst update on Thursday may seem negative at first, but it's not. Barclays is lowering its price target on the stock, but the firm is sticking with its overweight rating in anticipation of a strong report for the fiscal third quarter. There may be some pressure on guidance for the fiscal fourth quarter given recent fuel price increases and currency swings, but Barclays sees strong demand and bookings at Carnival. More importantly, the new price target is only ticking down from $22 to $21. The stock has taken nearly a $5 hit since its hitting a 52-week high in July. A $1 adjustment is fair, and it also give Carnival shares 43% of upside from current levels.
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Earlier this week it was the formerly bearish C. Patrick Scholes at Truist upgrading the stock from sell to hold. Scholes is more interested in Carnival's smaller rivals as investing opportunities, but he feels the industry itself will fare well. He sees Europe as a bullish headwind for the market next year. He's also lifting his price target from $16 to $17, where the bullish Susquehanna now rests.
Last week the market saw a more traditionally bullish upgrade, as Redburn upgraded Carnival stock from neutral to buy with a $23 price target. Redburn continues to see cruise getaways offering travelers a bargain compared to conventional hotel getaways, relative to pre-pandemic pricing for both leisure markets.
The timing of all of these analyst updates isn't a coincidence. The recent 25% correction since Carnival's summertime high could be an incentive to revisit a market call, but the real prize here is that Carnival reports its fiscal third-quarter results by the end of next week.
Momentum is on Carnival's side. Active customer deposits and bookings for future sailings hit new high-water marks in Carnival's latest quarter. Next week's report should be the cruising bellwether's first profit after 14 straight quarterly deficits. It has also improved its position with recent financing moves that lower its annualized interest expense exposure.
As a global juggernaut of leisure sea travel Carnival is going to be vulnerable to the global economy. A lot of things can rattle its foundation. However, the growing consensus is that next week's critical financial update will be as warm and inviting as many of the beach shore excursions that Carnival passengers can book.
