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Carnival Corp CCL

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Revenue Hopes Revived as Cruise Companies Plan Summer Sailings; Shares Trade Ahead of Fundamentals

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

While still constrained by domestic regulations, no-moat cruise operators Carnival, Royal Caribbean, and Norwegian have nimbly pivoted to deploy their fleets abroad, lining up summer departures from the U.K., Italy, Greece, Cyprus, and others. Thus, there is renewed hope for near-term revenue generation, and we have recently increased our passenger counts for 2022, resulting in higher fair value estimates for both Carnival ($24, from $20 prior) and Royal Caribbean ($65, from $60 prior). We have not lifted our $27 per share fair value estimate on Norwegian, as the firm is set to deploy three of its 28 ships this summer, and we had already modeled an introduction of capacity in its third quarter. Additionally, with increased communication between the CDC and cruise operators, and explicit, conservative plans from operators to restart cruising safely (including required vaccinations and negative COVID-19 tests, among other measures), we surmise an explicit date for a domestic restart could be on the horizon.

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Company Profile

Business Description

Carnival is the largest global cruise company, set to deploy 88 ships on the seas once cruising fully resumes after the pandemic. Its portfolio of brands includes Carnival Cruise Lines, Holland America, Princess Cruises, and Seabourn in North America; P&O Cruises and Cunard Line in the United Kingdom; Aida in Germany; Costa Cruises in Southern Europe; and P&O Cruises in Australia. Carnival also owns Holland America Princess Alaska Tours in Alaska and the Canadian Yukon. Carnival's brands attracted about 13 million guests in 2019, prior to COVID-19.

Contact
3655 N.W. 87th Avenue
Miami, FL, 33178-2428, Panama
T +1 305 599-2600
Sector Consumer Cyclical
Industry Travel Services
Most Recent Earnings Feb 28, 2021
Fiscal Year End Nov 30, 2021
Stock Type
Employees 70,000

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