BofA Raises Carnival Target Despite Recent Extension Of US Cruise Suspension

Given the extension of U.S. cruise suspension until October, liquidity and cash burn are likely to remain key factors for Carnival Corp CCL, according to BofA Securities.

The Carnival Analyst: Geoffrey d'Halluin maintained a Neutral rating for Carnival, while raising the price target to $18.

The Carnival Thesis: With the U.S. cruise suspension being extended, recovery is likely to be slow, which suggests 2021 could be a transition year, d'Halluin said in the note.

He said the reason for raising the price target as “rolling forward our multiple valuation methodology to FY22E (from FY21E) to reflect more normalized market conditions.”

The company announced the resumption of Costa’s operations in September and said Aida may be operational in next November, “both in a gradual manner with adjusted passenger capacity,” the analyst mentioned.

“Carnival has capacity to fund its requirement until mid-2021 in an environment with a pause in operations. While recent offerings have strengthened group’s liquidity profile, this came at a high cost, impacting group’s bottom line profile,” he wrote.

CCL Price Action: Shares of Carnival rose 4% to $18.38 at the time of publication Thursday.