Carnival's AIDA Cruise
Source: Carnival Twitter

Carnival (CCL) Stock Is a Good Buy After FDA Approves Pfizer Vaccine


Aug. 24 2021, Published 1:18 p.m. ET

Carnival (CCL) stock gained 4 percent on Aug. 23 and was up nearly 4 percent on Aug. 24 as of 10:40 a.m. ET. However, the stock is down 25 percent from its 52-week high of $31.52 on June 8. What’s CCL’s stock forecast for 2021, and is the stock a good buy now?

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Carnival stock has fallen from its 52-week highs even as broader markets surged to their all-time highs. This is mainly because investors have been cautious about the tourism industry amid the rise in COVID-19 cases in the U.S. CCL stock was also hit hard on reports of a COVID-19 outbreak on one of its ships.

ccl stock forecast good buy
Source: Carnival Twitter
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CCL stock is rising.

Carnival stock is rising after the FDA officially fully approved the COVID-19 vaccine developed by Pfizer and its partner BioNTech. The clearance should be good news for the tourism sector. Higher vaccination rates should make travel safer and encourage more people to take trips. The companies have mandated that staff and passengers on most of their cruises are vaccinated.

CCL’s stock price forecast

According to MarketBeat, analysts' average target price for CCL is $29.22, which is 24 percent above its current price. Among the 16 analysts tracking CCL, nine recommend a buy, five recommend a hold, and two recommend a sell. Their highest target price of $42 is 77 percent above the stock's current price, while their lowest target of $16 is 32 percent below.

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On Aug. 6, Citigroup analyst James Ainley boosted its target price on Carnival stock to $34 from $30 and maintained its buy rating on the stock. The analyst revised his predictions to reflect the uptick in online traffic and price data that Citigroup monitors.

ccl stock forecast good buy
Source: Carnival Twitter
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CCL’s valuation

Carnival trades at an NTM EV-to-sales multiple of 4.6x, which makes it look attractively priced compared to other cruise line stocks. Royal Caribbean and Norwegian Cruise Line have multiples of 5.9x and 5.4x, respectively.

CCL stock is a good buy now.

Carnival will see a significant revenue acceleration in 2022 as the cruise sector returns to normality and the coronavirus pandemic is brought under control. The massive pent-up demand for outdoor entertainment will help increase the cruise operator’s earnings. Carnival expects to operate at 65 percent of its total capacity by the end of 2021. The company is betting that fears about a resurgence in coronavirus cases won't discourage travelers.

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So far, eight of Carnival’s nine brands have announced plans to restart guest operations on 54 ships worldwide. Carnival's booking volumes were 45 percent higher in the second quarter than in the first quarter. The trend is expected to continue into the third- and fourth quarters. Analysts predict that the company's sales will decrease by 51 percent in fiscal 2021. However, the sales are expected to surge by 539 percent in fiscal 2022.

Carnival has about $9.3 billion in cash and short-term investments. All of the cash is derived from the debt that the company has taken on, but it also allows Carnival to recover quickly at full speed. Overall, CCL stock is a good reopening play at the current levels.


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