Carnival's Stock Still Lacks Momentum Despite Strong Q1 Performance

Carnival Corporation & plc (NYSE:CCL) stock has only slightly increased to around $30 after a strong 1Q25 performance. The company was disproportionately affected by COVID in 2020, falling from $63 to the low $20s. Despite a strong recovery, the market still seems to be missing the opportunity for Carnival stock.

Carnival Corporation & plc (NYSE: CCL) stock has only slightly increased to around $30 after a strong 1Q25 performance. The company was disproportionately affected by COVID in 2020, falling from $63 to the low $20s. Despite a strong recovery, the market still seems to be missing the opportunity for Carnival stock.

Carnival Corporation recently closed a €1.0 billion senior unsecured notes offering with a 4.125% interest rate maturing in 2031 [1]. The proceeds will be used to fully repay its 2027 secured term loan and partially pay down its 2028 secured term loan, demonstrating the company's commitment to deleveraging and reducing interest expenses. This strategic move indicates a strengthening financial position and creditworthiness, as the new notes feature investment grade-style covenants [1].

Analysts suggest that shares should be trading around $50, with a price target of $56, based on a bullish projection of terminal EBITDA reaching $8.4 billion by the end of 2025 [2]. The company's Q2 ticket revenue rose by 9.7% year-over-year to $6.3 billion, and cost controls remained flat despite heavy inflationary winds, indicating strong operational performance [2].

Despite these positive developments, the stock has not seen a significant increase in its price. The slow recovery can be attributed to lingering COVID damage and the overwhelming presence of presumed home runs in the AI sector [2]. However, once Carnival completes its refinancing, it is expected to enter investment-grade classification, which could attract more conservative investors and expand its investor base [2].

Investors should keep an eye on key items such as debt overhang, massive debt reduction, and the company's aggressive marketing strategy targeting younger generations. Carnival's focus on millennials and the alphabet generations has proven successful, with strong performances in H1 2025 [2].

In conclusion, while Carnival Corporation & plc has made significant strides in its recovery, the market still seems to be missing the opportunity for this stock. With a strong balance sheet, aggressive marketing strategies, and a potential upgrade to investment-grade status, investors may want to reconsider their positions on CCL.

References:

[1] https://www.stocktitan.net/news/CCL/carnival-corporation-plc-announces-closing-of-1-0-billion-4-125-bo7oii441h90.html

[2] https://seekingalpha.com/article/4800203-carnival-market-still-missing-the-opportunity