Carnival Q2 Preview: Converging Uptrend Implies Near-Term Uncertainties – Reiterate Hold

Summary:

  • CCL continues to trade sideways over the past few months, with the converging uptrend implying near-term uncertainties and decelerating buying momentum.
  • This is despite the cruise liner’s robust booking trends, growing customer deposits, higher net yields, and expanding Free Cash Flow generations.
  • Much of the headwinds may be attributed to CCL’s hefty debts and elevated interest expenses, with the Fed’s uncertain pivot posing challenges for its bottom-line improvement.
  • As a result of these conflicting developments, we believe that the CCL stock is likely to continue sideways as the management slowly executes its turnaround story over the next two years.
  • It may also be better to wait a little longer while getting more clarity about its FQ2’24 performance and near-term booking trends before making a decision.

Two deck chairs on a waterfront balcony. There is an ice bucket with wine and glasses

courtneyk/E+ via Getty Images

We previously covered Carnival Corporation & plc (NYSE:CCL) in November 2023, discussing the dramatic reversal in cruise sentiments then, as the stock lost much of its hyper-pandemic gains despite the expanding profitability and growing bookings.


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