Market Overview

Credit Suisse Sees Carnival Traveling To 18% Upside

Credit Suisse Sees Carnival Traveling To 18% Upside

Over the past six months, shares of Carnival Corp (NYSE: CCL) were essentially flat. Cruise stocks as a whole have underperformed lodging stocks by 33 percent since September. But on Tuesday, one Wall Street analyst turned bullish and said the stock is now an "attractive total shareholder return story."

The Analyst

Credit Suisse's Tim Ramskill upgraded Carnival's stock rating from Neutral to Outperform with a price target boosted from $72.40 to $78.10.

The Thesis

There are four reasons to support owning Carnival's stock, Ramskill said in the upgrade note. They are:

  • The fourth quarter marked Carnival's 18th consecutive earnings beat, and the momentum dynamics remain favorable as future bookings reached record highs. 
  • Management's cost discipline represents a "self-help angle," as the company saved a cumulative $370 million from 2014 through 2018.
  • Carnival should be able to spend $2 billion in stock buybacks by 2019 and issue a 2019 dividend that is above the Street's expectations, with incremental increases to come by 2022.
  • A low risk of business disruption.

Carnival's stock is trading at a 15-percent discount to the S&P 500 index, which marks a reversal from a 10-year average of trading at a 4-percent premium to the index.

Price Action

Shares of Carnival were trading higher by 1 percent early Tuesday morning.

Related Links:

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

Argus Embarks On Norwegian Cruise Lines With A Buy 

Photo by WikiEK/Wikimedia. 

Latest Ratings for CCL

Jul 2020HSBCDowngradesBuyHold
Jul 2020Credit SuisseMaintainsNeutral
Jun 2020RedburnDowngradesBuyNeutral

View More Analyst Ratings for CCL
View the Latest Analyst Ratings


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