Goldman Sachs Affirms Buy Recommendation for Carnival Corporation
Goldman Sachs Maintains Buy Rating on Carnival Corporation
Carnival Corporation (NYSE: CCL) has received a reaffirmation of its Buy rating and a stock price target of $23.00 from Goldman Sachs. This comes in light of a recent earnings report that exceeded market expectations, demonstrating the cruise operator's strong financial performance. The report revealed an adjusted EBITDA of $2.8 billion, which surpassed both Goldman Sachs and consensus estimates of approximately $2.7 billion, as well as the company’s previous guidance.
Outstanding Earnings Performance
Carnival’s adjusted earnings per share (EPS) came in at $1.27, outperforming expectations set by Goldman Sachs and analysts, which were at $1.15 and $1.16 respectively. This performance was particularly impressive when compared to the company’s prior guidance of $1.15. In addition, the constant currency net yields achieved were higher than forecasted at 8.7%, contrasting with Goldman Sachs' estimate of around 8.1%. Furthermore, the cruise operator reported a year-over-year decrease in net cruise costs excluding fuel of 0.4% (-0.3% in constant currency), a notable improvement from the anticipated increase of about 4.5%.
Positive Outlook for 2024
Looking forward, Carnival has revised its outlook for the full year 2024. The updated projection for EBITDA now stands at about $6 billion, a rise from a previous estimate of $5.83 billion. Similarly, the EPS forecast has been uplifted to $1.33 from $1.18. The expected net yield for the entire year is projected to increase to 10.4% on a constant currency basis, reflecting slight adjustments to analysts' predictions for the fourth quarter.
Bookings and Growth Indicators
The company has conveyed positive forward-looking statements, highlighting that nearly half of its 2025 bookings are at higher prices than the previous year. Furthermore, there's a strong start to 2026 with record booking volumes reported over the past three months. This optimistic outlook on future performance may foster increased investor confidence regarding Carnival's growth trajectory.
Analyst Updates and Price Targets
Carnival Corporation has been the focus of several recent analyst updates. BofA Securities reiterated a Buy rating on the stock, citing stable demand trends and favorable factors from fuel and currency movements. This firm has also raised its 2024 estimates for both EBITDA and EPS upwards. Stifel, another financial services company, has increased its price target for Carnival shares to $27.00, anticipating a potential raise in full-year guidance during their upcoming earnings report. Additionally, Mizuho Securities raised its target price for Carnival to $25.00, mirroring optimism about the corporation’s financial health and future growth prospects.
Record Performance and Growth Initiatives
Recently, Carnival Corporation reported record Q2 earnings that exceeded its guidance, showcasing a $170 million outperformance. This was driven by a solid 12% increase in yields, leading to record revenues, operating income, and all-time high customer deposits and booking levels. The forward-looking outlook remains positive with a projected yield guidance of 8% for Q3 and a $275 million improvement in full-year net income guidance due to enhanced yields and cost-saving measures.
Exciting Developments on the Horizon
Carnival has announced plans to expand its fleet by adding three new liquefied natural gas (LNG)-powered ships, scheduled for delivery in 2029, 2031, and 2033. This strategic agreement with Italian shipbuilder Fincantieri will yield the largest vessels in the Carnival Corporation global fleet, with nearly 230,000 gross registered tonnes each. In addition, Carnival is undertaking brand consolidation measures, planning to phase out P&O Cruises Australia while integrating it into Carnival Cruise Line.
Developing New Destinations
Moreover, the company is developing a new destination, Celebration Key, that is expected to open in 2025 and is anticipated to enhance revenue generation and fuel efficiency. These initiatives signal Carnival Corporation's ongoing commitment to growth and improving returns for its investors.
Frequently Asked Questions
What recent financial performance did Carnival report?
Carnival reported an adjusted EBITDA of $2.8 billion and an EPS of $1.27, exceeding market expectations.
What are analysts saying about Carnival's stock?
Goldman Sachs and other analysts have maintained a Buy rating on Carnival, with price targets ranging from $23 to $27.
What future projections did Carnival provide?
Carnival has increased its full-year 2024 EBITDA outlook to $6 billion and its EPS forecast to $1.33.
What expansion plans does Carnival have?
Carnival plans to introduce three new LNG-powered ships and is developing a new destination named Celebration Key.
How has Carnival's performance influenced investor confidence?
Carnival's strong earnings and positive outlook have contributed to increased investor optimism regarding its growth trajectory.
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