Carnival Cruises Into 2018 On A Wave Of Top-Line Growth; Analyst Sees More Upside

2017 was a good year for investors with exposure to the cruise sector as companies like Carnival Corp CCL benefited from strong industrywide booking demand. Heading into 2018, one Wall Street analyst is confident the favorable trends will continue.

The Analyst

Tigress Financial Partners' Ivan Feinseth maintains a Buy rating on Carnival's stock.

The Thesis

Carnival reported fiscal fourth quarter earnings last week, highlighted by greater operating improvements that helped offset the negative impact from recent hurricanes, unfavorable currency exchange rates and fuel pricing, Feinseth said in a note. (See the analyst's track record here.)

The company also benefited in the quarter from a boost in the consumer spending trend across the entire travel sector, Feinseth said. 

"[Carnival] is driving revenue and yield growth through its successful revenue management, marketing efforts and new technology initiatives," the analyst said. 

Investors could expect positive trends in return on capital and economic profit to continue driving greater shareholder value creation in 2018, according to Tigress Financial. 

Carnival managed to increase its fiscal 2017 revenue by 6.9 percent to $17.5 billion, and Feinseth is projecting a further 6-percent increase to $18.6 billion over the next year. Also, the company should increase its economic operating cash flow by 5.3 percent to $5.3 billion over the next year versus a 3.2 percent increase in 2017, he said. 

Price Action

Shares of Carnival have gained 27 percent since the start of 2017.

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