Why Carnival Stock Jumped This Week
What happened
Shares of Carnival (NYSE: CCL) were moving higher this week as the world's biggest cruise line operator got two high-profile analyst upgrades and investors continued to respond to signs that the business was recovering from the depths of the pandemic.
According to data from S&P Global Market Intelligence, the stock finished the week up 20.7%.
Image source: Getty Images.
So what
Carnival's best day came on Monday as analysts from both Bank of America and JPMorgan Chase issued bullish notes and raised their ratings on the cruise stock.
First, JPMorgan analyst Matthew Boss lifted his rating from neutral to overweight following a meeting with several industry management teams.
Boss said management took a "bullish tone" on the recovery, and sees no signs of a slowdown as demand from both cruise loyalists and new customers is strong. Boss also noted Carnival's improving balance sheet and raised his price target from $11 to $16.
Also on Monday, Bank of America analyst Andrew Didora raised his rating on the stock from neutral to buy, drawing a similar conclusion as Boss -- that demand for cruises remains strong and pricing trends are solid as well, and customer demand is robust even in the face of macroeconomic headwinds in the global economy. Didora gave the stock a price target of $20.
Carnival tacked on a couple more points on Wednesday as the Federal Reserve held benchmark interest rates steady for the first time in more than a year, a sign that interest rates could ease in the near future, which would lower the company's variable interest rate payments and potentially allow it to refinance its fixed-rate debt.
Finally, Citigroup joined the bullish chorus on Thursday as analyst James Hardiman upped his price target from $14 to $18 and maintained a buy rating on the stock. He's also on the lookout for positive catalysts from the stock.
Now what
Indeed, Carnival's latest earnings report shows that demand for cruising does seem to be returning with a vengeance.
The company reported a quarterly record for bookings in the first quarter, and it could impress investors again when it reports second-quarter earnings at the end of the month on June 26. Analysts see revenue nearly doubling from the year-ago quarter to $4.76 billion and are calling for a loss of $0.34 a share.
If the business momentum continues, Carnival could have more gains, as the stock is still trading well below pre-pandemic levels and strong demand could lead to record profits for the company.
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and JPMorgan Chase. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.
