On Wednesday, UBS reaffirmed its Buy rating and a $20.00 price target on Carnival Corporation (NYSE:CCL) stock, following the announcement of an additional ship order for the company's Carnival brand. This new vessel marks the fifth Excel-class ship for the Carnival brand and the eleventh across all of Carnival Corporation's brands, which is expected to contribute to keeping building costs low.
The new ship order is particularly noteworthy as it is of the same class and for the same brand as the one announced in February, indicating the Carnival brand's robust performance.
UBS estimates that, assuming a mid-year delivery, the new ship could increase Carnival's total North American capacity growth in 2028 by 60 basis points, raising the year-over-year growth to +2.6% from the previously projected +2.0%.
For Carnival Corporation's overall 2028 capacity growth, the new ship is estimated to add approximately 95 basis points, resulting in an increase to +1.6% year-over-year from an earlier forecast of +0.7%.
Carnival Corporation has also reported that there is a greater demand for Caribbean cruises than the current supply can meet. This is before the expected opening of Celebration Key in July 2025, which is anticipated to further boost the company's offerings in the region.
Celebration Key is designed to accommodate two ships at its pier and will feature a variety of attractions, such as pools and lagoons catering to different customer segments. An adults-only day club at Celebration Key is being compared to Royal Caribbean (NYSE:RCL)'s recently opened HideAway Beach, which debuted in December.
InvestingPro Insights
As Carnival Corporation (NYSE:CCL) continues to expand its fleet, investors may be interested in the company's financial health and market performance. According to InvestingPro data, Carnival boasts a significant market capitalization of $19.92 billion, reflecting its stature in the industry. Notably, the company has exhibited a remarkable year-over-year revenue growth of 77.44% in the last twelve months as of Q4 2023, signaling a strong recovery trajectory. This is further evidenced by a gross profit margin of nearly 50%, indicating robust operational efficiency.
InvestingPro Tips reveal that Carnival is a prominent player in the Hotels, Restaurants & Leisure industry and that its net income is expected to grow this year. This aligns with UBS's positive outlook on Carnival's capacity growth and the anticipated demand for Caribbean cruises. Additionally, with six analysts having revised their earnings upwards for the upcoming period, there's a sentiment of optimism surrounding the company's financial future. For investors seeking to delve deeper into Carnival's potential, InvestingPro offers additional tips that can be accessed at https://www.investing.com/pro/CCL. To enhance your investment research experience, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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