Carnival's stock sails toward a record monthly gain

By Tomi Kilgore

Cruise operator's stock has run up more than 50% in June amid record-breaking demand

Shares of Carnival Corp. have been climbing on cruise control in June, toward their best monthly performance since going public 36 years ago, fueled by record demand.

The cruise operator's stock (CCL) had hit a speed bump earlier this week, as strong quarterly results, with revenue more than doubling to beat expectations, and an upbeat full-year outlook prompted a brief "sell-the-news" reaction by investors.

After slumping 7.6% on Monday, the stock jumped 8.8% on Tuesday and another 8.9% in afternoon trading on Wednesday, enough to pace the S&P 500 index's gainers. The stock was on course for the biggest two-day gain since it rallied 20.9% in the two days ending Nov. 11, 2022.

Also read: Carnival's stock rallies to reverse almost all of its 'perplexing' post-earnings selloff.

So far in June, the stock has rocketed 54.1%. That not only makes the stock the best month-to-date performer in the S&P 500, but it would also mark the stock's biggest one-month rally since it started trading in July 1987, according to Dow Jones Market Data. The current record monthly gain is 45.7% in November 2020.

UBS analyst Robin Farley said if investors have a concern following Carnival's fiscal second-quarter results, it's that the company bumped up its full-year outlook for cruise costs for the second quarter in a row.

But Farley believes investors need not worry about the expense outlook. She said while 2023 is not typical in terms of making expense projections, given the inflation environment, the company has typically guided conservatively then beat that guidance.

"We believe budgeting for next year's expense guide, with all ships at full occupancy and the full fleet in operation, will give [Carnival] the kind of expense visibility that investors are used to having with [Carnival]," Farley wrote in a note to clients.

She reiterated the buy rating she's had on the stock since March 2021, and kept her price target at $12.

Carnival's peers have also enjoyed a strong June, with Norwegian Cruise Line Holdings Ltd.'s stock (NCLH) up 42.2% and Royal Caribbean Group shares (RCL) rallying 28.8%. The S&P 500 has gained 4.6% in June.

On a quarterly basis, Carnival's stock has climbed 70.4% and Norwegian's stock has hiked up 57.0%, which puts both on course for record quarterly gains. Royal Caribbean's stock has shot up 59.7% quarter to date, in line for the best quarterly performance since the record 77.8% rally in the third-quarter of 2009, according to Dow Jones Market Data.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-28-23 1516ET

Copyright (c) 2023 Dow Jones & Company, Inc.