Carnival Shares Climb Over 4% As Revenue Tops Estimates, Bookings Recovery Helps

Carnival shares rose over 4% on Friday after the world’s largest cruise ship operator reported better than expected revenue in the third quarter and said its cumulative advanced bookings for the second half of 2022 are ahead of pre-COVID-19 pandemic levels.

The firm reported revenue of $636 million, beating the wall street consensus estimates of $535 million.

The Miami, Florida-based company said its booking volumes for all future cruises during the third quarter of 2021 were higher than booking volumes during the first quarter of 2021. The company added that as of August 31, 2021, eight of the company’s nine brands have resumed guest operations as part of its gradual return to service.

Carnival said it ended the third quarter of 2021 with $7.8 billion of liquidity, which the company believes is sufficient to return to full cruise operations. Voyages for the third quarter of 2021 were cash flow positive and the company expects this to continue.

Following this optimism, Carnival shares rose over 4% to $25.72 on Friday.

However, the company reported U.S. GAAP net loss of $2.8 billion and an adjusted net loss of $2.0 billion for the third quarter of 2021.

Analyst Comments

“The company says Q3 occupancy was 54% and built during the month, and revenue per passenger cruise day was above 2019, driven by exceptionally strong onboard and other revenue. For the Carnival brand, revenue per PCD was 20% higher than 2019, despite onboard credits from cancelled cruises, with occupancy of 70%,” noted Jamie Rollo, Equity Analyst at Morgan Stanley.

“The comment on onboard spend is encouraging, and while there is no comment on ticket prices being up, we note that revenue per passenger is unlikely to be comparable to 2019 due to a difference mix of cabins. Q3 voyages were cash flow positive, and it expects this to continue. Despite the positive operating KPIs, the results were well below expectations, suggesting higher restart/lay-up/SG&A costs.”

Carnival Stock Price Forecast

Nine analysts who offered stock ratings for Carnival in the last three months forecast the average price in 12 months of $27.91 with a high forecast of $39.00 and a low forecast of $18.00.

The average price target represents an 8.90% change from the last price of $25.63. From those eight analysts, four rated “Buy”, one rated “Hold” while four rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $18 with a high of $40 under a bull scenario and $5 under the worst-case scenario. The firm gave an “Underweight” rating on the cruise ship operator’s stock.

Several other analysts have also updated their stock outlook. JPMorgan lifted their price objective to $36 from $33 and gave the company a “neutral” rating. Citigroup raised their target price to $34 from $30 and gave the stock a “buy” rating.

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