Carnival reports Q1 results early Wednesday amid a strong start to the 2024 travel season for cruise lines. CCL stock is basing ahead of results while rival Royal Caribbean (RCL) is trading in a buy zone at record highs.
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Cruise lines are riding a wave of bookings to kick off 2024.
Royal Caribbean in late February hiked its 2024 earnings guidance, citing stronger-than-expected vacation demand. The cruise line now expects full-year earnings per share of $9.90-$10.10, up 40 cents from its Feb. 1 target of a record $9.50-$9.70. About 15 cents of that increase reflects an improved revenue outlook in the first quarter. The company attributed the demand increase to its “WAVE season,” which offers extra deals from January through March.
Elsewhere, Carnival (CCL) in at the end of January announced it is almost sold out for the first half of the year after seeing record booking volumes since November.
However, the company expects to take a 7-8 cent per share hit to its adjusted 2024 earnings due to rerouting around the Red Sea conflict. Carnival expects most of the profit impact to occur in Q2 and said it has not seen any effects to its booking trends. The cruise line giant reported better-than-expected Q4 earnings and revenue in late December.
Susquehanna on Monday lowered its price target on CCL stock to 22 from 23, noting it expects first-quarter earnings to reflect rerouting and itinerary impacts. Still, the firm believes the strength of Carnival’s 2024 wave season should drive unit revenues to outperform. Susquehanna maintained a positive rating on the shares.
Mizuho initiated Carnival on Tuesday with a 21 price target.
Fleet Expansion
Carnival on Tuesday announced it reached an agreement with Meyer Werft shipyard for a fifth excel-class ship for the Carnival Cruise Line with delivery set for 2028. The new, 180,000-ton ship will run on liquefied natural gas and designed to carry over 6,400 guests and 1,800 crew.
The announcement comes after Carnival in mid-February said it ordered its fourth excel-class ship for its namesake line, which will join the fleet in the spring of 2027. Tuesday’s announcement marks Carnival’s 11th excel-class ship across four of its brands.
“This measured capacity growth strategy will result in our adding one to two ships per year beginning in 2027, and we will be identifying additional fleet plans over the coming months for our cruise lines to meet capacity demand and improve execution,” CEO Josh Weinstein said in the release.
For the first quarter, FactSet analysts expect Carnival to report a loss of 18 cents per share, improving from a loss of 55 cents per share the year prior. Wall Street forecasts revenue growth slows for the seventh consecutive quarter, increasing 22% to $5.42 billion.
Carnival Stock
CCL stock dipped 0.5% to 17.03 Tuesday ahead of results.
Carnival stock is consolidating with a 19.74 buy point after attempting to break out from a cup base at the end of December.
Shares retreated 8.1% so far this year but are holding above their key technical moving averages.
Royal Caribbean edged up 0.4% to 136.87 Tuesday, climbing further in the buy zone for its cup base after hitting an all-time high of 138.31 Monday. Shares broke out above the 133.77 buy point last Wednesday in strong volume.
RCL stock gained 5.7% in 2024.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
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