SoFi CEO enters prepaid forward contract on 1.5 million shares
Investing.com -- Citi analysts added Carnival (NYSE:CCL) Corp. to their Focus List and raised price targets across the cruise sector in a note Wednesday, citing enduring supply-demand tailwinds that support a long-term pricing advantage.
“It is hard to ignore the fact that the cruise industry is having a moment,” Citi wrote, adding that “this is much more than a moment” due to “better-than-ever demand dynamics coupled with lower-than-historical supply growth.”
The firm believes this favorable pricing backdrop could “last much longer than investors believe and even cruise management lets on.”
Carnival now has a new price target of $37, up from $30, while targets for Royal Caribbean (NYSE:RCL), Norwegian Cruise Line (NYSE:NCLH), and Viking Holdings were also raised. RCL’s target moves from $318 to $390, NCLH from $25 to $30, and VIK from $57 to $68.
Citi noted that web traffic and pricing data indicate “June/early July trends have either maintained or improved upon May trends, themselves an improvement on the April low.” Although company-level trends vary, Royal Caribbean and Viking remain “standout performers.”
A deep dive into cruise industry supply is said to reveal structural limitations on future growth. Citi projects global capacity to grow at a ~4% CAGR through 2030 and ~3% from 2030 to 2036, below the historical average of over 5%.
“The industry couldn’t likely accelerate this growth even if it tried,” Citi said, citing flat shipyard output.
Given that Carnival still trades about 40% below 2019 levels, Citi argues it “fits the description” of a name with exposure to the cruise industry recovery but is still early in the valuation realization cycle.