Recent insights reveal that Carnival, the cruise industry leader, is poised for an earnings boost ahead of its fiscal fourth-quarter results due this Friday. UBS Securities has reported a remarkable increase in 2025 bookings, reaching record levels, indicating a robust demand for cruise experiences.
Consequently, they have revised their price target for Carnival's stock from $24 to $31 and reaffirmed a buy rating. In terms of earnings performance, UBS now estimates fourth-quarter earnings per share (EPS) at $0.09, an increase of one cent from their previous forecast. This projection exceeds the consensus estimate of $0.07.
The brokerage anticipates net yields will rise by 5.5% on a year-over-year basis in constant currency, surpassing Carnival's own 5% forecast and the broader market estimate of 5.2%. These optimistic projections arise from findings from their channel checks, suggesting potential upside to the company's guidance. For the upcoming fiscal years, UBS forecasts 2025 EPS to reach $1.87, reflecting a year-over-year uptick of nearly 39%.
Furthermore, they expect a 2026 EPS of $2.16, indicating a growth of approximately 16% annually. In contrast, Wall Street projections for the same two years are $1.73 and $2, respectively. Looking ahead, UBS sees Carnival’s net yield increasing by 3.2% in constant currencies next year. While this estimate falls short of the 4% consensus, UBS analysts Robin Farley and Arpine Kocharyan believe there is potential for further upside. The analysts wrote, "We don't necessarily expect (Carnival) to start guidance that high since they typically approach guidance conservatively given the need for an outlook before wave season.
Investors have a solid understanding of management's conservative stance and are unlikely to penalize the company for guidance that falls below street expectations." Record bookings have been reported, with half of all cruises for 2025 already secured by the third quarter. According to UBS, “2025 certainly seems to be off to a strong start.
Carnival will also benefit from Celebration Key, a new private destination set to open in July." Looking at the fiscal first quarter, UBS characterized the holiday travel season as "very favorable" with Christmas and New Year's Day both landing on Wednesdays, resulting in two full weeks to implement holiday pricing strategies.
Price: 25.93, Change: +0.03, Percent Change: +0.13.