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What Should You Do with Carnival Stock Right Now?

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Carnival Corporation (NYSE:CCL) stock rose 2.4% in today’s pre-market trading session at 5:52 AM ET. The stock rose after Carnival Cruise Line said that it extended the suspension of its cruises in North America until September 30. Previously, the cruise line, owned by Carnival Corporation, announced that it would restart some voyages on August 1.

According to a Reuters report, “The cruise industry has taken a major hit from the novel coronavirus pandemic, with some of the earliest large clusters of COVID-19, the respiratory illness caused by the virus, occurring aboard cruise ships in which thousands of passengers and crew were packed in tight quarters.” The report also said, “To survive for months without revenue, the companies have issued debt and pursued additional funding.”

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On June 19, the Cruise Lines International Association said that its cruise line members, which include Royal Caribbean Cruises (NYSE:RCL), Norwegian Cruise Line Holdings (NASDAQ:NCLH), and Carnival, would voluntarily extend the suspension of voyages from US ports until September 15. Last week, Norwegian Cruise said that it has voluntarily extended its pause in operations through September 30. To learn more, read Before You Buy Norwegian Cruise Stock, Read This.

Growth projections for Carnival

On a reported basis, Carnival expects to post a net loss per share of $6.07 in the second quarter of fiscal 2020 compared to a net income per share of $0.65 in the second quarter of fiscal 2019. Excluding the impact of one-time items, the company expects to report a net loss per share of $3.30 in the second quarter compared to a net income per share of $0.66 in the same period a year ago. In the second quarter of fiscal 2020, Carnival expects to report sales of $0.7 billion—a decline of 85.5% from the second quarter of fiscal 2019.

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For the second quarter, Wall Street analysts expect a 90.9% fall in the revenue to $439.4 million from $4.8 billion in the second quarter of fiscal 2019. For fiscal 2020, analysts expect a 60.3% fall in the revenue to $8.3 billion from $20.8 billion in fiscal 2019. Analysts hope that the fiscal 2021 revenue will rise to $13.8 billion.

Analysts also hope that the second-quarter non-GAAP EPS will be lower at -$2.05 compared to $0.66 in the second quarter of fiscal 2019. For fiscal 2020, the non-GAAP EPS could decline to -$5.06 from $4.40 in fiscal 2019. Analysts also hope that the fiscal 2021 non-GAAP EPS will rise to -$1.13.

Analysts’ recommendations and target price

Most of the Wall Street analysts tracking Carnival stock still recommend a “hold” rating amid the coronavirus outbreak. Among the 20 analysts following the stock, 13 recommend a “hold,” three recommend a “sell,” and four recommend a “buy.” The consensus target price is $16.26 per share. The target price implies a downside of 5.6% based on Carnival’s closing price of $17.23 on Monday. The consensus target price for the stock has fallen from $18.03 in May—a reduction of 9.8%.

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On Monday, Redburn analyst Alex Brignall downgraded Carnival stock to “neutral” from “buy” due to signs of weaker demand recovery. According to a report from TheFly, “the firm’s demand indicator suggests that demand is not recovering in the same way that it is in other areas of travel. The analyst, who said that short-term uncertainty overwhelms long-term fundamentals.”

Stock returns

On Monday, Carnival stock fell 3.4% and closed at $17.23 with a market cap of $12.5 billion. Carnival’s stock price has fallen 11.4% in the trailing five-day period. Meanwhile, the stock price has fallen 63.1% in the trailing 12-month period. The stock is trading 66.8% below its 52-week high of $51.94 on January 17. The stock was also trading 120.9% above its 52-week low of $7.80 on April 2. So far in 2020, the stock has fallen by 66.1% as of Monday.

On Monday, Carnival stock was trading 8.1% below its 20-day moving average of $18.74. The stock is trading 11.3% above its 50-day moving average of $15.48 and 18.6% below its 100-day moving average of $21.17.

At 5:52 AM ET today, Norwegian Cruise Line Holdings and Royal Caribbean Cruises stocks rose 1.2% and 1.5%, respectively. At the same time, the S&P 500 futures rose 0.69%, while the Dow futures rose 0.76%.

Read Carnival’s Preliminary Q2 Results: Good and Bad and Why Is a J.P. Morgan Analyst Bullish about Carnival Stock? to learn more.

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