Carnival Corp's Private Island Strategy Poised For Significant Expansion, Says Analyst

Goldman Sachs analyst Lizzie Dove reiterated a price forecast of $35 and a Buy rating on the shares of Carnival Corp CCL and provided the following comments about its recently concluded investor event.

CCL’s strategy to develop private islands and exclusive destinations shows significant potential, with the capacity on its private islands expected to nearly double from 6.5 million to around 11 million passengers by 2030, said the analyst.

Management highlighted the considerable growth potential and expansion of its private island and exclusive destination strategy.

Management also pointed out that the growth will result in a daily capacity of approximately 95,000 guests by 2030, comparable to the throughput of Disney‘s Magic Kingdom.

Despite concluding 2024 with an impressive 13% growth in new-to-cruise customers and a 10% increase in brand repeaters, CCL’s management remains confident in the long-term growth potential and the opportunity to “catch up” with certain brands that have not yet reached 2019 performance levels, noted the analyst.

CCL considers there is still substantial opportunity for continued brand momentum, even for some of its top-performing brands, which will drive further financial growth.

The company also noted that they have returned to solid bookings, with two-thirds of 2025’s capacity already booked by December, and all brands are priced higher year-over-year, noted the analyst.

With demand significantly outpacing CCL’s supply growth, management stressed that new ships are not essential to increase yields or stimulate additional demand.

Instead, the focus is on optimizing sales from existing ships rather than relying on the pricing boost from introducing a new vessel.

According to the analyst, the slower projected newbuild pace will not only create a favorable supply-demand environment but also provide room for further debt reduction.

Management remains confident that CCL has a strong opportunity to improve its balance sheet and transfer debt to equity value, aiming for investment-grade metrics of approximately 3.5X by FY2026.

Price Action: CCL shares are trading lower by 0.25% at $25.54 at the last check Wednesday.

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