What happened
Cruise leader Carnival (CCL 0.78%) saw its stock fall 4.1% by 11:45 a.m. EDT on Thursday following a price-target cut on the shares this morning by Truist Financial.
Image source: Getty Images.
So what
In a note out this morning on TheFly.com, Truist cut its price target on Carnival stock by 15%, to $17.
After conversations with executives at large travel agencies and analyzing reported future bookings and pricing, according to the note, Truist concluded that Carnival is now looking at weak demand in the first half of this year. If correct, this would contradict projections from Carnival management late last year suggesting that demand for cruising was strong enough to permit the company to raise prices in 2022.
What's more, Truist believes that this lack of demand has depressed prices in the first half of this year, and this will continue in the rest of 2022, resulting in weak prices all year long.
Now what
Truist has long been a skeptic on Carnival stock. According to data from StreetInsider.com, the banker has maintained a steadfast sell rating on Carnival (at various price points ranging from as low as $10 to as high as $20) since at least as far back as November 2020.
Truist has also been generally right about Carnival, though, with the stock sinking from more than $30 as recently as late May 2021, to its current valuation of less than $19. The fact that Truist is still pessimistic about the stock's chances today (and indeed, a bit more pessimistic than yesterday) might not be a surprise -- but neither should investors ignore it.
