If it looked to you like the entire cruise industry was going to die two years or so ago, you were absolutely not alone. Many were expecting cruise lines like Carnival (NYSE:CCL) to fold completely under the weight of onerous government restrictions that pretty much canceled the industry. Yet the cruise industry has survived, and Carnival appears to be on the way back. Analysts are taking notice and changing their perceptions accordingly, sending Carnival shares up nicely in Thursday afternoon trading.
The latest step up for Carnival came from Citi’s James Hardiman, who stepped up from Hold to Buy while also hiking his price target from $10 to $14. Nice steps up, really, but what prompted them? Hardiman pointed to a clear interest in cruising at the consumer level as well as improvements in the balance sheet. If Carnival can improve its debt picture and step up its deleveraging, Hardiman noted, there’s a real potential for the stock to gain ground quickly.
Indeed, Carnival has made a lot of great advances that should keep drawing interested cruisers, as well as tip some fence-sitters over into Camp Bought-a-Ticket. Those worried about coming into contact with marijuana on their cruises will be happy to note that drug dogs will be present to check passengers. A recently-launched 72-hour sale known as the “Dockbuster” should help drive some interest, as well as some recent charitable work at a Jamaican hospital’s pediatric ward.
Analysts are giving Carnival the benefit of the doubt. With six Buy ratings, four Holds, and one Sell, CCL stock is considered a Moderate Buy by analyst consensus. Further, with an average price target of $12.17, Carnival Cruise Lines stock offers investors a 10.29% upside potential.