CCL stock rebounds after earnings beat; When does Cruise Giant expect to turn a profit?

Cruise giant Festival (CCL) reported fiscal second-quarter results early Monday as business and travel demand remained strong during the summer holiday season. Shares of CCL recovered on Tuesday after the 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 more than doubled to $4.91 billion in the second quarter from $2.4 billion last year. Total customer deposits reached $7.2 billion at the end of the quarter on May 31. This 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 sales of $4.79 billion.

Carnival expects third-quarter earnings before interest, taxes, depreciation and amortization, or EBITDA, of $2.05 billion and $2.15 billion. It sees adjusted net income of $950 million to $1.05 billion. For fiscal 2023, Carnival is guiding for adjusted EBITDA between $4.1 billion and $4.25 billion at 100% occupancy or higher. FactSet forecasts full-year EBITDA of $4.06 billion.

The company expects to return to profitability in the second half of fiscal 2023 while paying down its debt, Chief Financial Officer David Bernstein noted in the release.

The cruise operator has posted quarterly losses since the second quarter of 2020 as the coronavirus pandemic overwhelmed travel demand. But losses have steadily improved since the end of 2021, while revenue is recovering to near its pre-pandemic levels.

CCL stock: Price targets raised

Deutsche Bank raised its price target on CCL shares from 10 to 15 on Friday. It maintained a hold rating on the stock ahead of its second quarter report.

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It was upgraded from 13 to 18 per share, following Barclays’ price hike on Wednesday. Barclays kept its overweight rating on the stock. The company noted that the cruise industry is “closing the gap” between its cost and land-based vacations. Meanwhile, Carnival is closing its own operating gap with its cruise line, Barclays said.

Bank of America on June 12 raised its price targets on cruise ship shares and upgraded Carnival shares to a buy rating. BofA noted that industry demand remains steady and pricing environments are performing well. Also, 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 Royal Caribbean (RCL) and Norwegian Cruise Line (NCHL) shares at 95 and 19, respectively. Bank of America raised its price target on Carnival shares to 20 from 11.

Stocks fall after premarket rally

Shares of CCL rose around 4.7% in early Tuesday trading after falling 7.66% on Monday. That drop came despite shares rising more than 2% in premarket trading on Monday. It was not immediately clear what caused the stock to fall.

CCL stock has rallied 25% since breaking out of the cup bottom on June 6 and is trading in the profit-taking zone.

Carnival shares are up 88% so far this year.

You can follow Harrison Miller on Twitter for more stock news and updates @IBD_Harrison.

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