Cruise giant carnival (CCL) announced its fiscal second-quarter results early Monday as industry and travel demand remained strong as the summer holiday season approached. CCL stock rebounded on Tuesday after shares sank Monday after the results.
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Carnival’s adjusted loss improved to 31 cents per share, compared to a loss of $1.65 per share last year. Revenue doubled to $4.91 billion in the second quarter from $2.4 billion last year. Customer deposits totaled a record $7.2 billion by the end of the quarter on May 31. This surpassed the previous record of $6 billion on May 31, 2019.
CCL stock analysts polled by FactSet expected Carnival to report a loss of 34 cents per share on $4.79 billion in sales.
Carnival expects third-quarter earnings before interest, tax, depreciation, and amortization, or EBITDA, to be between $2.05 billion and $2.15 billion. Expected adjusted net income ranges from $950 million to $1.05 billion. For fiscal year 2023, Carnival has guided adjusted EBITDA between $4.1 billion and $4.25 billion with occupancy of 100% or higher. FactSet expects EBITDA for the full year to be $4.06 billion.
CFO David Bernstein noted in the statement that the company expects to return to profitability in the second half of fiscal 2023 while it works to pay down its debt.
The cruise company has posted a quarterly loss since the second quarter of 2020 as the coronavirus pandemic swamped travel demand. But losses have improved steadily since the end of 2021 while revenues are recovering near pre-pandemic levels.
CCL stock: the high price
Deutsche Bank raised its price target for CCL stock on Friday to 15 from 10. It maintained a hold rating on the stock ahead of its second-quarter report.
The upgrade followed a hike in Barclays’ price on Wednesday to 18 from 13 per share. Barclays retained its overvalued rating on the stock. The company noted that the cruise industry is “bridging the gap” between its pricing and land-based vacations. Meanwhile, Carnival is closing its operating gap with its marine peers, Barclays said.
Bank of America raised its price targets for a fleet of cruise ship stocks on June 12 and upgraded Carnival stock to a buy rating. BofA noted that industry demand remains flat and pricing environments are behaving well. Furthermore, BofA noted after meeting with industry representatives that booking trends are in line with the company’s expectations.
The bank also raised its price targets for Royal Caribbean (RCL) And Norwegian Cruise Line (NCLH) to 95 and 19, respectively. Bank of America raised its target price for Carnival stock to 20 from 11.
Stocks drop after a pre-market rally
CCL stock rebounded about 4.7% early Tuesday after losing 7.66% on Monday. The drop came despite stocks rising more than 2% before the report was released on Monday. It wasn’t immediately clear why the stock was down.
CCL stock jumped 25% after exiting the cup base on June 6 and is trading in profit-taking territory.
Carnival stock is down 88% so far this year.
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