Carnival Corporation (CCL) PT Lowered to $29, Credit Suisse Sees 3 Takes
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Credit Suisse analyst Benjamin Chaiken lowered the price target on Carnival Corporation (NYSE: CCL) to $29.00 (from $38.00) after the company filed an 8-K taking down expectations.
The analyst reiterated an Outperform rating noting 3 takeaways from the announcement:
1) Recent booking trends sound healthy, and accelerating, although 2H22 cumulative price has decelerated since the last update in 1Q. Price is now below ’19 vs previously above. We think there are various factors at play (e.g., European weakness, selective promotional activity, larger volume of close-in bookings given slow start to the year), surprisingly this was not dissected on the call. For the time being ’23 price is above ’19.
2) We now have a bogey in which to better model costs. CCL targeted full year ’22 costs per ALBD up mid-teens vs. ‘19, we think suggesting 4Q22 should be up LSD-MSD vs ’19. Recall, CCL had previously highlighted a cost saving opportunity of around 500bps relative to ’19 from the sold ships and more efficient new capacity coming online, which appears to have been eaten away by several years of inflation. There was no update to this language in terms of formal guidance for ’23, but we think expectations should be that costs are up in ‘23, we think previously there was hope / an expectation that there would be relative efficiencies in the fleet vs. ’19.
3) The Carnival brand is expected to approach 110% occupancy in 3Q22, a positive sign for future cruise demand, especially in the context of the market questioning if those previous occupancy levels will ever be a reality again.
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