CFRA, a well-known financial research firm, raised the price target on shares of Carnival Corporation (NYSE:CCL) to $22.00, up from the previous $21.00, while maintaining a Buy rating on the stock. The adjustment follows Carnival's reported earnings for the August quarter, which surpassed consensus expectations.
The firm's analyst cited a forward price-to-earnings (P/E) ratio of 13.3x for the fiscal year 2025, which is a discount compared to the stock's 10-year mean forward P/E of 15.8x. This change in price target reflects an increase in the adjusted earnings per share (EPS) estimates, which have been raised by $0.15 to $1.33 for fiscal year 2024 and by $0.18 to $1.65 for fiscal year 2025.
Carnival Corporation recently announced an adjusted EPS of $1.27 for the August quarter, a 48% increase from $0.86 in the same period last year, which was well above the $1.15 consensus. Furthermore, the company has updated its full-year adjusted EPS guidance to $1.33, up from the previously forecasted $1.18, outpacing the current consensus of $1.12.
Despite the positive earnings report and raised guidance, Carnival's shares experienced a roughly 3% decline on Monday morning. This market reaction is attributed to the company's fiscal fourth-quarter 2024 guidance of an adjusted EPS of $0.05, which falls short of the consensus estimate of $0.07.
Carnival has reported robust advanced bookings for fiscal year 2025, claiming they are higher than any previous record for the current year. Additionally, the company has indicated that bookings for 2026 have had an unprecedented start. CFRA's analyst remains optimistic regarding Carnival's pricing power and recent initiatives, including the sunset of P&O Cruises Australia, the introduction of Starlink, Celebration Key, and the launch of three new ships. The firm reiterates its Buy opinion on the company's shares.
Carnival Corporation has reported a record third-quarter Adjusted EBITDA of $2.8 billion, surpassing estimates and resulting in an upward revision of its full-year guidance. This performance was attributed to lower costs and higher daily rates, signaling a robust recovery for the company. Citi and Stifel have reaffirmed their Buy ratings on Carnival, showing confidence in the company's future prospects.
Carnival has announced the expansion of its fleet with three new liquefied natural gas (LNG)-powered ships, scheduled for delivery in 2029, 2031, and 2033. The company is also in the process of strategic brand consolidation, with plans to sunset P&O Cruises Australia and integrate it into Carnival Cruise Line.
Goldman Sachs and BofA Securities have also reaffirmed their Buy ratings on Carnival shares, citing strong earnings and stable demand. The company's third-quarter revenue reached $7.9 billion, exceeding market expectations, and its profit per share forecast for 2024 has been adjusted to $1.33, up from the previous estimate of $1.18.
InvestingPro Insights
To complement CFRA's analysis, InvestingPro data offers additional insights into Carnival Corporation's financial performance. The company's revenue growth of 34.02% over the last twelve months as of Q2 2024 aligns with the positive earnings report mentioned in the article. This growth is further supported by a robust EBITDA growth of 310.04% over the same period, indicating strong operational performance.
InvestingPro Tips highlight that Carnival is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.2. This metric supports CFRA's view that the stock is trading at a discount compared to its historical valuation. Additionally, the tip that "7 analysts have revised their earnings upwards for the upcoming period" corroborates the article's mention of raised EPS estimates.
It's worth noting that InvestingPro offers 10 additional tips for Carnival Corporation, providing investors with a more comprehensive analysis of the company's financial health and market position.
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