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Investing.com - TD Cowen has initiated coverage on Carnival Corporation (NYSE:CCL) with a Buy rating and a price target of $36.00 on Tuesday. The cruise line operator, currently trading at $29.79 and with a market capitalization of $38.8 billion, has seen its stock surge over 61% in the past year, according to InvestingPro data.
The research firm highlighted Carnival’s slower capacity growth, projecting sub-1% expansion through 2029, as new ship orders are largely offset by older vessels leaving the fleet. This shift allows management to focus on yield optimization and margin improvement rather than expansion. The strategy appears to be working, with the company maintaining a healthy gross profit margin of 54.7%.
TD Cowen noted that Carnival’s approximately 7% yield growth in the first half of 2025 is expected to lead the industry, supported by the company’s YODA yield optimization system. The firm also pointed to 2025 EBITDA margins trending 150-200 basis points higher year-over-year.
Starting from a relatively low net margin base of 7.6% in 2024, TD Cowen projects Carnival will achieve five-year compound annual growth rates of 19% for net income and 21% for earnings per share.
The positive outlook is attributed to a combination of operating margin expansion and declining interest expenses, according to the research firm’s analysis. With a P/E ratio of 15.32x and trading near its 52-week high of $30.46, investors seeking deeper insights can access comprehensive analysis and 10+ additional key metrics through InvestingPro’s detailed research reports.
In other recent news, Carnival Corporation has successfully closed a $3 billion private offering of 5.75% senior unsecured notes due in 2032. The proceeds from this offering will be used to fully repay borrowings under its first-priority senior secured term loan facility maturing in 2028 and to redeem $2.4 billion of its 5.75% senior unsecured notes due in 2027. Additionally, Carnival has also closed a €1.0 billion offering of 4.125% senior unsecured notes due in 2031, which will help repay borrowings under its secured term loan facilities. These moves are part of Carnival’s ongoing strategy to deleverage and manage its debt profile.
Goldman Sachs has reiterated its Buy rating on Carnival, citing sustainable demand growth in cruise travel driven by pricing advantages and high service levels. The investment bank also noted that Carnival is focused on achieving investment grade metrics, which could enhance capital returns. Furthermore, Carnival announced the launch of a $2 billion senior unsecured notes offering, expected to mature in 2032, to further manage its debt obligations. The company has been actively refinancing its debt, having refinanced nearly $11 billion and prepaid $1.1 billion this year.
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