Carnival Posts Strong Q3 Earnings, Analysts Suspect 'Some Conservatism Built Into Q4 Guidance'

Shares of Carnival Corp CCL tanked in early trading on Tuesday, even after the company reported upbeat third-quarter earnings.

The Miami-based company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

• Truist Securities analyst Patrick Scholes reiterated a Hold rating and price target of $20.
• Morgan Stanley analyst Jamie Rollo maintained an Underweight rating, while raising the price target from $15.00 to $16.50.
• Stifel analyst Steven M. Wieczynski reaffirmed a Buy rating and price target of $27.
• JPMorgan Chase analyst Matthew Boss reiterated an Overweight rating on the stock.

Check out other analyst stock ratings.

Truist Securities: Carnival reported strong quarterly results, with adjusted earnings of $1.27 per share surpassing consensus of $1.17, with the beat being driven by better-than-expected costs, Scholes said in a note. Ticket revenues missed consensus projections by a small margin, he added.

"Looking at 4Q guide, Yields (revenues) look slightly lower than Street expectations and operating costs look slightly higher," the analyst wrote. The fourth quarter is unlikely to be as strong as the third, "though we suspect there is some conservatism built into guidance as is usually the case for cruise companies," he further stated.

Morgan Stanley: Management projected net revenue yields of 5.0% for the fourth quarter, which fell short of expectations, Rollo said. The full-year guidance moves from 4.5% to 3.5%, driven mainly by better-than-expected cost savings, he added.

"While the cruise booking environment remains stronger than other travel segments, and CCL has the benefit of fuel and currency moving in its favour, it has an asset heavy model with high operating and financial leverage, so every 1% on revenue yield is ~10% to EPS, leaving it relatively more exposed to a slowdown than other names under our coverage," the analyst further wrote.

Stifel: "We got a solid beat, positive forward commentary, and revised guidance that still seems conservative," Wieczynski said in a note. While there are concerns around pricing erosion and elevated costs in 2025, Carnival has strong bookings and its earnings for that year "could end up with a two-handle," he added.

If the current trends and demand continue, with fuel and currency impact being favorable, the company may record more than $2 per share in earnings in 2025, the analyst stated. "2025/early-2026 booking commentary remains encouraging and there is nothing we can see today that would make us believe demand/spending is slowing," he further wrote.

JPMorgan: Carnival reported an earnings beat for the third quarter, with "upside across both the top and bottom line," Boss said. The company has "high-margin, same ship yield growth" and an "even stronger base of business for 2025," he added.

"Importantly, both ticket prices and onboard spending is up mid-single digits," the analyst wrote. Management raised their full-year 2024 guidance to $1.33, significantly higher that Street expectations, he further stated.

Price Action: Shares of Carnival had declined by 3.2% to $17.90 at the time of publication on Tuesday.

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