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Citi analysts raise Carnival to Buy rating

Published 2023-05-25, 08:34 a/m
Updated 2023-05-25, 08:34 a/m
© Reuters.

Investing.com -- Carnival Corp.'s (NYSE:CCL) balance sheet is at a "turning point" as the cruise industry recovers from pandemic-era restrictions, analysts at Citi said in a note upgrading its rating of the stock to buy from neutral.

The Citi analysts said seaborne leisure travel operators like Carnival are seeing continued positive momentum from COVID rules that shut down business for more than a year.

"As arguably the last remaining COVID reopening story, pandemic tailwinds to the cruise industry are greater than any macro headwinds," the analysts said, adding that a turnaround effort under new chief executive officer Josh Weinstein is working.

Shares in Carinval gained more than 2% in premarket trading on Thursday.

The analysts also pointed to the "difficult-to-quantify but increasingly evident willingness" of investors to place bets on the cruise industry - and Carnival in particular. This trend will prove to be "a tailwind for valuation" that will be amplified "if/when" Carnival manages to both remove leverage off its balance sheet and deliver earnings that meet or exceed expectations.

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