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Carnival Corporation (CCL), headquartered in Miami with a market cap of $18.7 billion, is the world’s largest cruise operator. It leads the leisure travel industry, serving nearly half of global cruise guests, and operates through four segments: NAA Cruise Operations, Europe Cruise Operations, Cruise Support, and Tour and Other.
Shares of the cruise line operator have underperformed the broader market considerably over the past year. CCL has plunged 12.4% over this time frame, while the S&P 500 Index ($SPX) has surged 19%. Moreover, in 2024, CCL stock is down 15%, while the SPX is up 14.2% over the same period.
Zooming in further, CCL also trails behind the ALPS Global Travel Beneficiaries ETF (JRNY). The exchange-traded fund has dropped 6.3% over the past year.
CCL stock has underperformed the broader market due to several factors, including economic uncertainties affecting discretionary spending and increased costs from stringent environmental regulations. Additionally, high levels of debt and fluctuating fuel prices have pressured CCL.
However, Carnival Corporation is thriving financially as the pandemic's impact fades, with record bookings for 2025 enhancing revenue prospects. Although its debt had reached $30 billion against $6.8 billion in equity, it has reduced by $1.2 billion over six months, with minimal maturing this year. Despite its debt, Carnival remains the largest cruise line, capturing nearly 43% of global passenger traffic.
Additionally, shares of CCL surged 24.1% in June, despite a slow start to the month and warnings from analysts about cruise pricing power. The company's fiscal Q2 earnings exceeded expectations, driving the impressive price performance.
For the current fiscal year, ending in November, analysts expect CCL to report earnings per share of $1.18 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 21 analysts covering CCL stock, the consensus rating is a “Strong Buy.” That’s based on 17 “Strong Buy” ratings, one “Moderate Buy,” two “Holds,” and one “Strong Sell.”
This configuration has been consistent over the past months.
On July 24, JPMorgan (JPM) raised Carnival's price target from $23 to $25, which implies an upside potential of 58.6%. It maintained an “Overweight” rating, citing strong demand and no signs of a slowdown in cruise indicators.
The mean price target of $21.61 represents a 43.5% premium to CCL’s current price levels. The Street-high price target of $27 suggests the stock can rally as much as 71.3%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
