On Monday, Bernstein has reaffirmed its Market Perform rating on Carnival Corporation (NYSE:LON:CCL) with a steady price target of $26.00. The firm’s stance comes in light of Carnival (NYSE:CCL)’s recent closure of the year and its forward-looking guidance into 2025. With a current market capitalization of $34.63 billion and trading near its 52-week high of $27.16, InvestingPro analysis suggests the stock is slightly overvalued at current levels.
According to the travel industry data, Carnival has already secured bookings for two-thirds of its 2025 capacity, with North American and European booking windows reaching unprecedented lengths.
Additionally, the company’s yields are expected to increase by 4.2%, building on a robust growth of 6.7% in 2024. This positive momentum is reflected in Carnival’s impressive revenue growth of 15.88% over the last twelve months, as reported by InvestingPro, which offers comprehensive analysis through its Pro Research Reports covering 1,400+ top stocks.
Carnival’s performance indicators suggest a strong consumer demand for cruise vacations, with no signs of a downturn in the leisure travel sector. The analyst noted that the cruise industry continues to be attractive and is on track to capture a larger share of the global lodging market. This growth trajectory is supported by favorable demographic trends and product enhancements.
Despite the positive outlook for the industry and Carnival’s strategic moves, such as expanding its destination business and adding new ships, the company’s primary focus remains on improving leverage and return on invested capital (ROIC). This focus is seen as a limiting factor for further investment in the company. InvestingPro data reveals a debt-to-equity ratio of 3.12 and a current ROIC of 8%, highlighting the company’s financial leverage challenges.
Bernstein contrasts Carnival’s forecast with that of its competitor, Royal Caribbean (NYSE:RCL) Cruises Ltd. (not mentioned with a ticker), which is expected to achieve a 12% growth in EBITDA for 2025. This is compared to Carnival’s guided growth of 8%.
The valuation gap between the two companies is minimal, with enterprise value to EBIT multiples only slightly more than one turn apart. Despite Carnival’s strong demand and positive guidance, Bernstein suggests a more favorable outlook for Royal Caribbean based on its growth potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.