During the pandemic era it seemed for a while it was touch and go whether Carnival (NYSE:CCL) would survive. But the cruise line made it through, and its recently reported fiscal Q1 results showed that total customer deposits climbed to a first quarter record of $7 billion, exceeding the prior first quarter record by $1.3 billion.
There were other strong metrics in the print. Revenue increased by 22.1% year-over-year to $5.41 billion, just edging ahead of the Street’s call by $10 million. Adj. EPS of -$0.14, also fared better than expectations, by $0.04.
On the other hand, for 2024, the company expects EPS of $0.98. While an increase on the prior $0.93 forecast it is not quite as strong as the consensus estimate of $1.00. Additionally, the company said the anticipated loss of Baltimore as a home port for one ship full time and another vessel seasonally given the recent collapse of Baltimore’s Francis Scott Key Bridge could have an impact of up to $10 million on both adjusted EBITDA and adjusted net income for FY2024.
When looking at the sum of its parts, Deutsche Bank analyst Chris Woronka does not think the print is “enough to result in major pivots from either bulls or bears.”
While Woronka thinks the bull case “remains intact for now,” he does ponder if there might be a “pending expiration date.” That is because, shortly after the year reaches its midpoint, CCL and similar companies will have to delve deeper into discussions about 2025 bookings.
Woronka acknowledges the positive momentum of early bookings, but it’s important to note that the bulk of bookings for next year are still pending. “Moreover,” the analyst goes on to say, “we are in the camp that views onboard spend as having the best predictive value when it comes to future booking intentions. To that end, we believe the flattening out of the growth rate of onboard spend in 1Q24 vs. 4Q23, both relative to comparable 2019 levels, could be an early indicator of some exhaustion on the part of certain cruise customers. We think this is a key performance metric to monitor in coming quarters.”
For now, then, Woronka remains on the sidelines with a Hold (i.e., Neutral) rating and an $18 price target, indicating room for one-year returns of 10%. (To watch Woronka’s track record, click here)
One more analyst joins Woronka on the fence with a Hold rating, but they are outflanked by 11 Buys, all coalescing to a Strong Buy consensus view. There are plenty of gains projected too; at $22.55, the average target implies shares will deliver returns of ~47% over the coming months. (See Carnival stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
