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BofA Cuts Carnival Target, With Slow Cruise Line Recovery Ahead

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BofA Cuts Carnival Target, With Slow Cruise Line Recovery Ahead

While Carnival Corp’s (NYSE: CCL) German cruise line AIDA Cruises will resume operations in August, the timing of the recovery remains uncertain, and the main Carnival Cruise Line has extended its operational pause in North America through September 30, according to BofA Securities. 

The Carnival Analyst: Geoffrey d'Halluin maintained a Neutral rating on Carnival and reduced the price target from 1,500 pence ($18.92) to 1,270 pence ($16.02).

The Carnival Thesis: Although the extended suspension and slower recovery will impact Carnival’s earnings in the near-term, the company has a strong liquidity position, and the cash burn rate means the company can fund its requirements for another full year with paused operations, d'Halluin said in a Monday note. (See his track record here.)

Carnival rhas aised more than $10 billion since March through a series of financing transactions and has $8.8 billion of committed credit facilities to fund ship deliveries through 2023, the analyst said.

He estimates the company’s monthly cash burn rate for the second half of 2020 at around $650 million.

Although Carnival continues to expect a net loss for the second half of 2020, the cruise line estimates that it could achieve cash flow breakeven by operating just 25 of its ships, according to BofA. 

CCL Price Action: Shares of Carnival were down 2.91% at $15.69 at the time of publication Monday.

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Latest Ratings for CCL

DateFirmActionFromTo
Jul 2020HSBCDowngradesBuyHold
Jul 2020Credit SuisseMaintainsNeutral
Jun 2020RedburnDowngradesBuyNeutral

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