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Investing.com - UBS raised its price target on Carnival Corporation (NYSE:CCL) to $35.00 from $33.00 on Wednesday, while maintaining a Buy rating on the cruise operator following better-than-expected third-quarter results. The stock, currently trading at $28.91, has delivered an impressive 60% return over the past year, with analysts setting price targets ranging from $26 to $43.
The investment firm adjusted its estimates for Carnival after the company’s Q3 performance exceeded expectations, with UBS keeping its fourth-quarter net yield estimate at 4.8% year-over-year growth in constant currency, above Carnival’s guidance of 4.3%. According to InvestingPro data, the company maintains strong financial health with an overall score of 3.17 out of 5, supported by a healthy gross profit margin of 55%.
UBS believes there could be potential upside to Carnival’s full-year yield guidance of 5.3% in constant currency, noting that the company’s strength this year has come from close-in demand and onboard spending—factors that should continue to benefit Q4 performance.
According to UBS, Carnival has reported that booking volumes have strengthened since May, and the cruise industry will be comparing against a period of uncertainty leading up to last year’s elections, which could show improvement in year-over-year close-in bookings.
The firm’s valuation of Carnival is based on a 12-14x multiple of estimated 2027 earnings per share, with UBS now discounting by 0.25 periods versus its previous 0.5 period discount, resulting in the price target increase from $33 to $35. The stock currently trades at a P/E ratio of 15.17x, with a notably low PEG ratio of 0.23, suggesting attractive valuation relative to its growth prospects.
In other recent news, Carnival Corporation reported strong quarterly earnings, with adjusted EBITDA surpassing consensus expectations by 3%, translating to an $89 million beat. The company’s adjusted EPS also exceeded forecasts by $0.11 per share, driven by higher-than-expected ticket revenue and lower costs in several categories. Carnival has priced a $1.25 billion private offering of 5.125% senior unsecured notes due in 2029, intending to use the proceeds to redeem $2.0 billion of its 6.000% senior unsecured notes. This financial maneuver aligns with Carnival’s strategy to reduce interest expenses. S&P Global Ratings revised Carnival’s outlook to positive from stable, citing strong performance and improved financial metrics. UBS maintained its Buy rating and a $33.00 price target on Carnival, noting strong demand and onboard spending. Meanwhile, Bernstein reiterated its Market Perform rating with a $26.00 price target, despite the company’s strong quarterly performance and positive booking trends. Lastly, Truist Securities maintained a Hold rating with a $31.00 price target following the solid quarterly results.
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