Market Overview

What's Wall Street Think About Carnival?


Shares of cruise company Carnival Corp (NYSE: CCL) gained 1 percent after its quarterly earnings beat Street view by $0.08 and revenue of $3.651 billion came in slightly above expectations for $3.618 billion as it paid less for fuel and carried more passengers.

The impressive part is that the Miami-based company successfully navigated several issues such as Zika virus in the Carribean, Carnival's biggest market, and terror attacks in Europe.

For the second quarter, Carnival expects earnings between $0.34 and $0.38 per share. Analysts, on average, expect earnings of $0.38 per share.

For the full year, Carnival said it now expects earnings between $3.20 and $3.40 per share, while its earlier estimate was between $3.10 and $3.40 per share. Analysts' consensus view calls for an earnings of $3.38 per share. Carnival still expects revenue to rise 3 percent for the year, slightly below the analysts' expectation of 4 percent rise to $16.31 billion.

Here is the Street's take on the results.

Nomura - Buy, PT $62

"We expect CCL's EPS and stock outperformance to continue through 2016. The pace of 2016 bookings accelerated through 1Q and is now well ahead YoY. Positive booking momentum should continue through 2016 leaving fewer cabins to sell and driving close-in pricing higher. Better pricing could add about 25bps to our +3.1% const. dollar net yield growth estimate, or $0.03 of EPS."

JPMorgan – Neutral, PT raised to $58 from $57

"This was a solid quarter for CCL and, coupled with the company's unchanged 2016 net yield outlook for constant $ net yields to grow about 3%, it should reaffirm the bull thesis for cruise operating fundamentals at CCL."

"At this point, we remain Neutral on CCL shares and prefer Royal Caribbean Cruises Ltd (NYSE: RCL) and Norwegian Cruise Line Holdings Ltd (NASDAQ: NCLH) given the outsized multi-year EPS growth at each company and given the relative valuation versus CCL."

Citi – Buy, PT $58

"Cumulative bookings for '16 are well ahead of the prior year at slightly higher prices and bookings taken YTD for the rest of 2016 are also up YoY, which is encouraging. While the midpoint of 2Q guidance was slightly below FC and European trends will need to be monitored, we continue to feel that CCL is well positioned for 2016."

"We think the Brussels attack had an impact on European/Med trends, but not significant, and believe '16 guidance is very achievable."

Credit Suisse – Outperform, PT $60

"We continue to see a structural tailwind for the industry in pricing, see upside to earnings as its cost structure is normalized and believe CCL will also attract a stream of incremental buyers as U.S. recession fears subside."

Among others, Barclays maintained its Equal-Weight rating on CCL and raised price target to $58, and Goldman Sachs also reiterated its Neutral rating and increased target price on CCL shares to $53.50. In addition, SunTrust Robinson Humphrey raised its price target by $1 to $60, while maintaining Buy rating on CCL.

Latest Ratings for CCL

Sep 2020BarclaysUpgradesEqual-WeightOverweight
Aug 2020Morgan StanleyMaintainsUnderweight
Jul 2020HSBCDowngradesBuyHold

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