On Wednesday, Goldman Sachs initiated coverage on Carnival Corporation (NYSE:CCL) with a Buy rating and a price target of $20.00. The investment firm highlighted several factors contributing to Carnival's favorable outlook for 2024. Among these are expectations of a conservative guide from the company despite anticipated larger occupancy recovery, particularly due to its higher exposure to Europe.
Goldman Sachs pointed to brand and late-stage revenue improvements, as well as manageable supply growth as additional positive indicators.
Carnival's forthcoming private island investments were also noted as a significant catalyst for growth. The company's destination capacity is expected to increase from approximately 5.7 million in 2023 to around 10 million by 2028. Specifically, Celebration Key is projected to contribute a net yield increase of approximately 1.8% and an EBITDA uplift of $100 million on an annualized basis.
The financial institution further commented on Carnival's financial position, forecasting substantial balance sheet improvement. According to Goldman Sachs' estimates, Carnival is set to reduce its leverage from 6.7 times as of the fiscal year 2023 to less than 3.5 times by the fiscal year 2026. This anticipated de-leveraging is seen as a strong move towards financial stability for the cruise operator.
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