Key Points

  • 1. Carnival Corporation orders a second Excel-class cruise ship, reflecting their commitment to growth and responsible capital allocation strategy.
  • 2. Concerns about piracy and conflict in the Red Sea cause a slight dip in Carnival stock, prompting a revised price target of $22 per share.
  • 3. Despite the challenges, the long-term outlook for Carnival remains optimistic, with a potential 29% gain in stock value over the next year.
  • 4. Carnival has seen a significant revenue rebound after navigating the pandemic, with 2022 marking a record year for revenue.
  • 5. Analysts predict 2024 to be the year of recovery for Carnival, with forecasts suggesting another record-breaking year for revenue and profits.

Carnival Orders New Excel-Class Ship, Stock Outlook Remains Bright Despite Red Sea Rerouting

Carnival Corporation (CCL) continues to invest in its future, placing an order for a second Excel-class cruise ship from Meyer Werft shipyard in Germany. This 180,000-ton vessel, powered by Liquefied Natural Gas (LNG), will join the Carnival fleet in 2028 and accommodate 6,400 passengers and 1,800 crew members.

This latest order reflects Carnival's commitment to growth while maintaining a responsible capital allocation strategy. CEO Josh Weinstein emphasized their focus on utilizing strong cash flow to improve the balance sheet, reduce debt, and ultimately transfer value to shareholders.

The news comes as Carnival prepares to report its fiscal Q1 results on Wednesday. Analysts expect an adjusted loss of $0.18 per share on $5.4 billion in sales, with the company itself forecasting a slightly higher loss of $0.22 per share. In Q4, Carnival reported an adjusted loss of $0.07 per share on $5.4 billion in sales.

Red Sea Concerns Cause Minor Setback

While the new ship order is positive news, Carnival stock (CCL) experienced a slight dip on Monday due to concerns about piracy and conflict in the Red Sea. This prompted Susquehanna International Group to adjust their price target for CCL to $22 per share. According to a note covered by TheFly.com, these issues have forced the rerouting or cancellation of "certain itineraries" in the region.

Long-Term Outlook Remains Optimistic

Despite the Red Sea challenges, Susquehanna's revised price target still implies a potential 29% gain for Carnival stock over the next year, a significant increase considering the stock has already nearly doubled in the past year.

The bigger picture for Carnival remains positive. After navigating the pandemic, the company has seen a significant revenue rebound. 2022 marked a record year for revenue, and 2023 came close to profitability with a loss of only $74 million (compared to a $10 billion loss in 2020).

2024: A Year of Recovery

Analysts predict 2024 to be the year Carnival completes its recovery. Forecasts suggest another record-breaking year for revenue ($24.6 billion) and nearly $1 per share in profits, resulting in a modest P/E ratio of 18.

Looking ahead, the future appears even brighter. Over the next five years, Carnival's sales are expected to grow by 11% annually, with earnings more than doubling to $2.53 per share. Debt remains a consideration, with a net debt load of $29.5 billion, but the company is making progress on this front. Bankruptcy fears seem to be receding, and smoother sailing is on the horizon for Carnival.



About CARNIVAL CORP


  • Ticker CCL
  • Exchange NYSE
  • Sector Consumer Cyclical
  • Industry Travel Services
  • Shares Outstandng 1,112,710,016
  • Market Cap $15.6B
  • Description
  • Carnival Corporation & plc operates as a leisure travel company. Its ships visit approximately 700 ports under the Carnival Cruise Line, Princess Cruises, Holland America Line, P&O Cruises (Australia), Seabourn, Costa Cruises, AIDA Cruises, P&O Cruises (UK), and Cunard brand names. The company also provides port destinations and othe...
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