Carnival (CCL 3.55%) will report earnings results for the fiscal third quarter on Sept. 30. Despite strong demand for cruise vacations, the shares have been range-bound this year, but Stifel Financial analyst Steven Wieczynski believes a better-than-expected earnings release could send the stock higher.
The analyst kept a buy rating on the shares and raised his price target from $25 to $27, representing upside of 44% from the current share price.
Why buy Carnival stock
Carnival is coming off a strong quarter, with record revenue, operating income, customer deposits, and bookings. Management said there is “unprecedented demand” for 2025. This could tee off another strong earnings report for the third quarter.
As the company continues to pay down debt and reduce costs, more earnings growth should send the share price higher. The current consensus estimate has Carnival reporting adjusted earnings per share of $1.20 this year before increasing it again to $1.59 in fiscal 2025.
However, Wieczynski believes Carnival could also beat next year’s earnings estimate. Management continues to find costs to strip out of the business, which helped it beat guidance last quarter.
Most importantly, the demand for cruises continues to look incredibly strong. The booking curve for North America is at record levels, and this should continue to benefit pricing and boost profits.
The stock has rallied heading into the third-quarter earnings report, so investors are expecting good news, but the stock is still trading at a fair valuation. As investors start looking ahead to 2025 guidance, Carnival stock could hit new highs and head toward the analyst’s price target.
