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Investing.com - Stifel raised its price target on Carnival Corporation (NYSE:CCL) to $34.00 from $33.00 on Wednesday while maintaining a Buy rating following the cruise operator’s strong quarterly performance. The new target aligns with the broader analyst consensus, as InvestingPro data shows analyst targets ranging from $21 to $35, with 4 analysts recently revising their earnings estimates upward.
The cruise line not only exceeded its fiscal second-quarter 2025 guidance but also provided forward guidance and commentary that surpassed market expectations, according to Stifel. The positive results generated minimal investor concerns, a rarity in the cruise sector where earnings reports typically trigger numerous questions. The company’s strong performance is reflected in its impressive 10.82% revenue growth and robust gross profit margin of 54.7%, according to InvestingPro data.
Stifel emphasized that despite occasional short-term demand fluctuations related to macroeconomic shocks in recent months, there is no evidence suggesting cruise demand is weakening. The firm noted that demand trends appear to be strengthening, with Carnival’s 2026 booking commentary described as "healthy" and "upbeat."
The positive booking trends for 2026 could potentially set higher expectations for competitors Royal Caribbean (NYSE:RCL), Norwegian Cruise Line (NYSE:NCLH), and Viking when they report their results. Carnival’s performance suggests continued strength in the cruise industry despite periodic market concerns.
Stifel highlighted that Carnival is trading at approximately a 9% free cash flow yield, which the firm characterized as "grossly inexpensive," indicating potential for further share price appreciation in the cruise operator.
In other recent news, Carnival Corporation reported impressive financial results for the second quarter of 2025, surpassing both earnings and revenue forecasts. The company announced an earnings per share of $0.35, exceeding the anticipated $0.24, and revenue of $6.33 billion, which was higher than the expected $6.21 billion. These results led Carnival to raise its full-year net income guidance to $2.7 billion. Additionally, the company achieved its highest EBITDA margins in nearly two decades, reflecting strong operational performance.
Carnival Corporation also reported a 26% year-over-year increase in EBITDA and a 67% rise in operating income. The company plans to continue enhancing its offerings with new destinations and ship upgrades, such as the upcoming Celebration Key and the Aida Evolution program. Furthermore, Carnival has announced a new loyalty program set to launch in 2026, which will reward passengers based on total spending.
Analysts from firms like JPMorgan and Mizuho (NYSE:MFG) Securities have noted the company’s strong performance and strategic initiatives. Despite macroeconomic pressures and geopolitical tensions, Carnival remains optimistic about its future, with plans to set new targets in early 2026. The company is also focused on reducing its carbon intensity and managing its debt, with recent credit rating upgrades reflecting its financial improvements.
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