BNP Paribas sees Carnival stock outperform with $26 target

On Thursday, BNP Paribas (OTC:BNPQY) Exane initiated coverage on Carnival Corporation (NYSE:CCL) shares with a rating of Outperform and set a price target of $26.00. The firm’s outlook on the cruise operator, currently valued at $28 billion, is optimistic, citing the upcoming launch of the company’s new private island, Celebration Key, which is expected to begin welcoming guests in July 2025. InvestingPro data shows that 9 analysts have recently revised their earnings estimates upward, with price targets ranging from $14 to $34.

The analyst believes that the addition of Celebration Key will significantly contribute to Carnival’s revenue yields, potentially outperforming the current consensus estimates. According to BNP Paribas Exane, the new destination will enhance the company’s appeal and offer a fresh experience for travelers looking for exclusive vacation options.

Carnival Corporation is also anticipated to see an acceleration in free cash flow (FCF) generation, building on its current FCF of $1.3 billion. The analyst notes that the company’s efforts to lower its net debt levels, which had increased following the Covid-19 pandemic, should result in a shift of value to equity holders. This financial improvement is seen as a positive sign for the stock’s future performance, supported by InvestingPro’s GREAT Financial Health Score and strong profitability metrics, including a 54% gross profit margin.

The company’s strategic moves come after a challenging period for the cruise industry, which faced significant disruptions due to the global health crisis. As travel restrictions ease and consumer confidence returns, Carnival’s focus on expanding its offerings and strengthening its balance sheet is expected to position it well for growth. The company has demonstrated this recovery with annual revenue reaching $25.4 billion and maintaining a competitive P/E ratio of 11.7x.

Carnival Corporation’s stock is set to potentially benefit from these developments, as indicated by the Outperform rating and the $26 price target, suggesting a bullish stance from BNP Paribas Exane on the cruise line’s market prospects.

In other recent news, Carnival Corporation reported record first-quarter results for 2025, with a 7.47% increase in revenue reaching $5.8 billion. The company experienced a 5.5% rise in ticket revenue and an 11.1% increase in onboard and other revenues. S&P Global Ratings upgraded Carnival’s credit rating to ’BB+’ due to better-than-expected performance and strong bookings, with expectations of revenue and EBITDA growth for the fiscal year. Tigress Financial Partners raised Carnival’s stock price target to $32, citing robust demand and strong booking volumes, while Stifel increased their target to $31, maintaining a Buy rating. Mizuho (NYSE:MFG) Securities also raised their price target to $33, reflecting confidence in Carnival’s first-quarter results and positive outlook. However, Bernstein maintained a Market Perform rating with a $26 target, acknowledging strong demand but pointing out increased costs and execution risks. Carnival’s ongoing fleet expansion and land-based developments are expected to drive growth, with the company on track to meet its Sea Change 2026 targets a year ahead of schedule.

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