Cruise giant carnival (CCL) reported second-quarter financial results early Monday as industrial and travel demand remains strong heading into the summer holiday season. CCL shares rebounded on Tuesday after shares fell on Monday following the results.
Carnival’s adjusted loss improved to 31 cents per share compared with a loss of $1.65 per share last year. Revenue doubled to a record $4.91 billion in the second quarter from $2.4 billion last year. Total customer deposits reached a record $7.2 billion at the end of the quarter on May 31. It surpassed the previous record of $6 billion as of May 31, 2019.
CCL stock analysts polled by FactSet expected Carnival to report a loss of 34 cents a share on $4.79 billion in sales.
Carnival expects third-quarter earnings before interest, taxes, depreciation and amortization, or EBITDA, between $2.05 billion and $2.15 billion. It sees adjusted net income ranging from $950 million to $1.05 billion. For fiscal 2023, Carnival guided adjusted EBITDA between $4.1 billion and $4.25 billion at 100% occupancy or higher. FactSet forecasts full-year EBITDA at $4.06 billion.
The company expects to return to profitability in the second half of fiscal 2023 as it works to pay down debt, Chief Financial Officer David Bernstein noted in the release.
The cruise operator has posted quarterly losses since the second quarter of 2020 when the coronavirus pandemic depressed travel demand. But losses steadily improved since late 2021 while earnings are recovering close to pre-pandemic levels.
CCL stock: Price target raised
Deutsche Bank raised its price target on CCL stock on Friday to 15 from 10. It maintained a hold rating on the stock ahead of its second-quarter report.
The upgrade followed Barclays’ price increase on Wednesday to 18 from 13 per share. Barclays maintained its overweight rating on the stock. The firm noted that the cruise industry is “closing the gap” between prices and land-based vacations. Meanwhile, Carnival is closing its own operating gap with its seafaring peers, Barclays said.
Bank of America raised its price targets on a fleet of cruise ship stocks on June 12 and upgraded Carnival stock to a buy rating. BofA noted that industry demand remains stable and pricing environments are behaving well. Furthermore, BofA noted after a meeting with industry representatives that booking trends are in line with the company’s expectations.
The bank also raised its price targets for Royal Caribbean (RCL) and Norwegian Cruise Line (NCLH) shares to 95 and 19 respectively. Bank of America raised the price target on the Carnival share to 20 from 11.
Shares fall after rising in the pre-market
CCL stock returned 4.7% early Tuesday after rising 7.66% on Monday. This drop came even though shares rose more than 2% pre-market on Monday ahead of the report. It was not immediately clear what caused the stock to fall.
CCL shares rose 25% after breaking out of a cup base on June 6 and are trading in a profit zone.
Carnival shares have risen 88% so far this year.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison.
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