What happened
Shares of Carnival (CCL 1.49%) were moving higher today after the cruise line stock got an upgrade from Susquehanna Research. Gains in the broad market also likely gave it a boost.
As of 2:36 p.m. ET on Wednesday, the stock was up 6%, while the S&P 500 was up 1.2%.
Image source: Getty Images.
So what
In a note this morning, Susquehanna analyst Christopher Stathoulopoulos raised his rating on Carnival from neutral to positive.
The analyst said the recent post-earnings sell-off indicated some concerns that the recovery in demand could lead Carnival to increase spending, but Stathoulopoulos believes that unit margins will continue to improve through fiscal 2024.
He also said the company has "effectively de-risked" liquidity concerns due to its recent margin-improvement initiatives. Stathoulopoulos also raised his price target on the stock from $8 to $11.
The bullish note follows endorsements from other analysts at Stifel and Wells Fargo earlier in the year.
Now what
Carnival showed another loss for the first quarter in its earnings report on Monday with an adjusted loss of $0.55 per share, though that was slightly better than estimates for a loss of $0.60.
Revenue in the quarter reached $4.4 billion, representing 95% of its 2019 level, indicating that the company has nearly made a full recovery from the pandemic.
CEO Josh Weinstein called the bookings in the first quarter "phenomenal" with the highest-ever quarterly booking volumes during the promotional "wave season."
The stock sold off as its bottom-line guidance was worse than expected, calling for a per-share loss of $0.28 to $0.44, compared to the consensus for a loss of $0.08.
However, analysts seem encouraged by the strong bookings growth, a sign that it should continue to benefit from the travel recovery tailwinds.
If the company can get back to profitability, this cruise stock should have a lot of room to run.
