Is Carnival stock poised to rise into the $20 range or higher?

Carnival Co. & plc New York Stock Exchange: CCL is the largest cruise operator and leisure travel company in the world, with an estimated market share of 47%. The consumer discretionary giant was one of the hardest hit during the pandemic and has been trying to recover ever since. While most investors and casual consumers may believe that Carnival offers low-cost namesake cruises under the Carnival Cruise Line brand, it actually operates multiple brands that cater to a wide range of budgets, vacation styles, and demographics.

Rival cruise ship operator Royal Caribbean Cruises Ltd. New York Stock Exchange: RCL saw its share recover to pre-pandemic levels at historic highs. Norwegian Cruise Line Holdings Ltd. (NLCH) shares are a fraction of its pre-COVID levels. Carnival remains at the bottom as it is still trying to return to profitability.

Carnival’s portfolio of brands

Carnival operates 87 ships under 9 brands, serving more than 13 million passengers annually. Its namesake, Carnival Cruise Lines, is the largest brand, with 22 ships making 1,500 voyages a year. Its largest ship, Panorama, can accommodate 4,008 guests. Its Seaborn cruise line offers an ultra-luxury experience for well-heeled cruisers. Princess Cruise Lines is an upscale premium brand that caters to experienced cruisers with elegant dining options.

Cunard and Holland America cater to mature travelers and culture enthusiasts. His Costa Crociere is a popular European line. Aida Cruises operates in Germany and P&P Cruises primarily serves Australia and the United Kingdom. Check the heat map of the sector on MarketBeat.

We’re still digging our way out of the hole.

Carnival reported a fiscal loss of 14 cents per share per share in the first quarter of 2024, beating consensus analysts’ estimates for a loss of 18 cents by 4 cents. Adjusted net loss was $180 million. Adjusted EBITDA was $871 million. Gross margins doubled in 2023 and net returns exceeded 2023 levels by more than 17%. Revenue increased 22% year-over-year to a record $5.41 billion versus consensus estimates of $5.42 billion.

Staggering metrics hit

Carnival started its wave season early with reservations. Bookings have risen to all-time highs with prices considerably higher year-on-year. Strength was solid across all its brands, with the NAA segment considerably higher than Europe on a year-on-year basis. Total customer deposits reached a record $7 billion, surpassing the previous record of $1.3 billion. Carnival has ordered its first newbuilds in 5 years to be delivered in 2027 and 2028. The booked position for the remainder of the year is the best on record in both pricing and occupancy, which is “considerably higher” than the 2023.

Return to profitability in 2024 estimates

Carnival forecast a per-share loss of 3 cents for the second quarter of 2024, in line with consensus estimates. Adjusted EBITDA is expected to increase more than 50% year-over-year to approximately $1.05 billion, with net CC yields increasing nearly 10.5% year-over-year, including the unfavorable impact of Red Sea diversion by 0.5 percentage points.

Carnival raises full-year 2024 EPS to 93 cents, below consensus analyst estimates of $1.00. The company expects net returns to rise to 9.5% in constant currency (CC) on an annual basis. Adjusted cruise costs, excluding fuel, are expected to improve by $35 million compared to December guidance. Adjusted EBITDA is expected to grow 30% year-over-year to approximately $5.63 billion, despite the Red Sea redirection of nearly $130 million or 9 cents impact on adjusted EPS.

Baltimore Key Bridge

The collapse of the Francis Scott Key Bridge in Baltimore, MD forced Carnival to temporarily change its home port. This could cause up to a $10 million impact on adjusted EBITDA and adjusted net income for full-year 2024.

Comments from the CEO

Josh Weinstein, CEO of Carnival, commented: “Our improved operating performance, combined with excess liquidity and the lowest backlog in decades, leaves us well positioned to continue to opportunistically manage debt and interest expenses , while reducing the complexity of our capital structure.”

Weinstein continued: “This is very much in line with our return to investment grade credit over time, and our treasury team has been quick to capitalize on this trajectory with a continued flow of well-executed transactions to strengthen our balance sheet.” . Weinstein noted that the vast majority of the year’s businesses are already on track to achieve record revenue and EBITDA.

Carnival analyst ratings and price targets I’m on MarketBeat. The titles of Carnival contestants and contestants can be found with MarketBeat Stock Screener.

Daily ascending triangle pattern

The daily candlestick chart for CCL illustrates a daily ascending triangle pattern. The ascending lower trendline formed at a low of $10.84 on October 20, 2024. CCL made higher lows, rising towards the flat upper trendline resistance at $19.74. Shares are set to break out above the $19.74 resistance to reach $20 or collapse below the ascending trend line support at $16.30.

The daily relative strength index (RSI) is starting to break below the 50 band. The pullback support levels are at $15.43, $14.44, $12.83, and $12.04.

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