According to Melius Research, Carnival stock has the potential to increase nearly one-third by 2024. Analyst Conor Cunningham from Melius raised his rating on Carnival's stock (CCL) to Buy from Hold and maintained a target price of $19. This suggests a 32% gain from the previous closing price of $14.41.
Carnival and other cruise operators have experienced a significant rebound this year as travel resumes following the pandemic. Royal Caribbean (RCL) is up 115% and ranks as the third-best-performing S&P 500 stock. Carnival sits in the tenth position with a gain of almost 82%. However, the stock's current price remains below its pre-pandemic level.
Cunningham expressed optimism about the future demand for cruise vacations, stating that the recovery has been strong and is expected to continue into 2024. He predicts record demand at record prices.
During Carnival's third-quarter earnings report on September 29, management announced that advanced bookings for 2024 exceeded historical ranges, with higher prices than in 2023 after accounting for foreign-currency rates.
While the stock's rally has been impressive, there are factors that could potentially impact its performance. Fluctuating fuel costs pose a significant expense for cruise lines, and any decision regarding production cuts by OPEC (Organization of the Petroleum Exporting Countries) could affect oil prices and subsequently affect the stock.
Another concern is the escalating Israel-Hamas war, which could lead to cancellations if customers fear a broader conflict. Additionally, investors will be monitoring any updates provided by Carnival regarding booking volumes on Black Friday and Cyber Monday, as well as the release of the company's fourth-quarter results on December 30.
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