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Stifel: Investors Missed The Boat In Selling Carnival

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Stifel: Investors Missed The Boat In Selling Carnival

  • Tuesday, Carnival Corp (NYSE: CCL) declined 5.4 percent after reporting disappointing FY15 guidance.
  • Stifel's Steven Wieczynski reiterated the firm's Buy rating and encouraged investors to "accumulate shares" on Tuesday's pullback.
  • Wieczynski stated that investors' response to Carnival's revised guidance was "misguided" and that the "level of intense scrutiny investors are applying to the revision" is unnecessary.
  • Following Tuesday's 5 percent selloff, Stifel reiterated its Buy rating on Carnival Corp, while also raising its target price by $1 to $61.

    That represents roughly a 20 percent premium over Wednesday's early trade at $50.50.

    Stifel's Wieczynski argued that investors fundamentally misunderstand Carnival's pricing strategy, which is moving toward a pricing scheme that offers lower prices up front and moves away from last-minute discounts. That will ultimately be better for Carnival's bottom line, Stifel said.

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    The New Pricing Strategy

    Carnival is leading in this new pricing strategy, though Stifel suggested that it will become "more widely adopted across the industry." As that happens, the industry will condition customers to not wait until the last minute for discounts. Judging by Carnival's strength in booking close-in trips, Wieczynski suggested that the strategy is the right one.

    Even with Tuesday's sharp decline, Carnival is higher year-to-date, gaining 11.5 percent. At $50.50, the price is 7 percent below its 52-week high at $54.05; meanwhile, the price is more than 50 percent above its 52-week low of $33.11.

    Image Credit: Public Domain

    Latest Ratings for CCL

    DateFirmActionFromTo
    Jan 2020MaintainsNeutral
    Dec 2019MaintainsNeutral
    Dec 2019MaintainsEqual-Weight

    View More Analyst Ratings for CCL
    View the Latest Analyst Ratings

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