Why Carnival Stock Moved To Yearly Highs

Carnival Corporation Video 01.06.21.

Carnival Stock Gains Ground As Cruising Continues To Restart

Shares of Carnival Corporation gained upside momentum and moved to yearly highs as investors bet that cruise line operators would enjoy strong demand as coronavirus-related rules get relaxed in the second half of this year.

Yesterday, Carnival’s AIDA Cruises announced that it opened bookings for AIDAcosma over Christmas and New Year’s Eve while AIDAperla’s new Mediterranean voyages in summer 2021 could be booked from May 31.

Meanwhile, Royal Caribbean stated that Silversea Cruises announced new summer voyages in Alaska and Iceland which would begin in July 2021.

The market welcomed the news, and shares of cruise line operators moved higher in today’s trading session.

What’s Next For Carnival Corporation?

Carnival stock is up by 40% this year as traders bet that pent-up demand for cruising would provide strong support to company’s financials in the next few years.

Currently, analysts expect that Carnival would report a loss of $5.29 per share in 2021. The company is projected to return to profitability in 2022 with a profit of $0.24 per share so the stock is trading at about 127 forward P/E which is an ultra-rich valuation.

However, the market is willing to look beyond 2022 and looks ready to focus on longer-term perspectives. At this point, it is ready to ignore the rapid accumulation of debt which was raised to support the company through the acute phase of the coronavirus crisis.

The stock market remains close to all-time high levels while Fed officials managed to calm bond markets and promised to provide sufficient support in the upcoming months.

In this environment, investors and traders are willing to bet on the rebound of the hardest-hit industries, including cruising. This is bullish for Carnival stock, and the company’s shares have decent chances to gain additional upside momentum despite their lofty valuation.

For a look at all of today’s economic events, check out our economic calendar.