Appetite for Travel Supports Strong Outlook at Carnival; Shares Attractive

We don’t plan any material change to our $25 (GBX 1,890) fair value estimate for no-moat Carnival after incorporating second-quarter results into our model and view shares as undervalued even after a roughly 10% post-print pop. While quarterly revenue of $2.4 billion and an EPS loss of $1.61 were a bit lower than our projections, the firm’s outlook for the remainder of the year remained positive (on trend with our outlook). Sales were split about equally between ticket and onboard, with bundled packaging remaining popular, indicating the willingness to partake in offerings while sailing. On the cost side, fuel spend weighed on expenses, up nearly 30% over the same period in 2019, while service costs on its $35 billion in debt continue to run at $1.6 billion annually.