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On Wednesday, Stifel analysts maintained their Buy rating on Carnival Corporation (NYSE:CCL) shares, with a steady price target of $34.00. According to InvestingPro data, 12 analysts have recently revised their earnings upward for the upcoming period, with price targets ranging from $14 to $35. Following a recent investor presentation on Cunard’s latest ship, Queen Anne, Stifel expressed a belief that their yield assumptions for the years 2025 to 2027 might be too conservative. The presentation, which included Carnival's top management team, provided insights into the company's market position and its potential for long-term growth.
The analysts noted that while it is still early in the Wave Season, the period during which cruise bookings are typically at their highest, the booking and demand patterns look promising for 2025 and extend into 2026. Based on the current trends, the full-year yield guidance of approximately 4% appears to be understated. Stifel suggests that if Carnival continues to see strong onboard metrics and stable close-in pricing, the company could surpass the yield expectations set forth in their guidance.
Stifel's confidence in their estimates, which were recently increased from $32 to $34 following Carnival's fourth-quarter earnings, remains unshaken. This adjustment was made just four weeks prior to the reaffirmation of the price target. The analysts also mentioned that with Carnival having nearly achieved its SEA Change sustainability goals, there is anticipation that the company might announce a new set of long-term financial objectives before the end of the year. For a deeper understanding of Carnival's financial health, which InvestingPro rates as GREAT, investors can access the comprehensive Pro Research Report, offering detailed analysis of the company's performance metrics and growth potential.
In other recent news, Carnival Corporation has been the focus of several analyst notes. Truist Securities has reiterated its Hold rating on Carnival, maintaining a $29 price target, while Stifel has increased its price target to $34, upholding a Buy rating. Bernstein, on the other hand, has reaffirmed a Market Perform rating with a steady price target of $26. Carnival's strategic focus on enhancing its top-performing brands, debt reduction efforts, and the potential for dividend resumption were highlighted by Truist.
In other developments, board member Sara Mathew has decided not to seek re-election and will step down from her position in April 2025. Carnival has not specified who would succeed Mathew on the board.
The company also concluded the fiscal year 2024 with a net debt to adjusted EBITDA ratio of 4.3x, projecting this figure to decrease to 3.8x by the end of FY2025. The company's booking position is significantly ahead of the historical norm, expected to contribute to record net yields.
Stifel's analyst anticipates that the actual yields for 2025 could surpass expectations by 5% or more, potentially leading to earnings per share (EPS) with a $2-handle. This is based on the assumption that Carnival will experience significant free cash flow (FCF) generation beginning in 2025.
Meanwhile, Bernstein contrasts Carnival's forecast with that of its competitor, Royal Caribbean (NYSE:RCL) Cruises Ltd., which is expected to achieve a 12% growth in EBITDA for 2025 compared to Carnival's guided growth of 8%. Despite Carnival's strong demand and positive guidance, Bernstein suggests a more favorable outlook for Royal Caribbean based on its growth potential.
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