What happened

Shares of Carnival (CCL 0.69%) were cruising higher for the second day in a row as investors continued to spy a buying opportunity after the earnings-related sell-off on Monday. 

Today, a bullish analyst note from Citigrouseemed to be the catalyst for the continuing gains in the travel stock. 

As of 1:44 p.m. ET, the stock was up 8.5%.

So what

Citi analyst James Hardiman raised his price target from $18 to $20 this morning, implying more than 25% upside from Carnival's closing price yesterday, and reaffirmed his buy rating on the stock.

Hardiman said that the stock was rebounding as investors reacted to the company's new set of 2026 targets, which include taking steps back to an investment-grade credit ratio, and its continued momentum in the business going into 2024.

Hardiman wasn't the only analyst offering encouraging words for Carnival. Yesterday, a number of analysts raised their price targets on the stock in the wake of the second-quarter earnings report, commenting on the strong 2026 guidance, which calls for $7 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA) by that year.

Now what

Monday's sell-off came in spite of the company beating estimates on the top and bottom lines and raising its guidance for the rest of the year. 

The response seemed to indicate that investors had already priced in the Q2 results, as the stock has roughly doubled this year, but the surge in the stock over the last two days seems to show that investors see greater upside in Carnival shares.

In its just-announced 2026 targets, the company expects EBITDA per available passenger berth day (ALBD/APBD) to increase 50% from current levels, and it expects adjusted return on invested capital (ROIC) to double to 12%. The company also said it expected to get back to strong profitability and investment-grade leverage metrics.

If Carnival can hit those targets, the stock still has a lot of upside potential, and investors seem to be responding to that today.