Cruise ship operator Carnival Corporation (CCL) announced its intent to sell shares worth $500 million through its agent, Bofa Securities, Inc. Shares fell 1.4% to close at $25.78 on June 29.
The proceeds from the sale will be utilized to purchase ordinary shares of Carnival plc, which is listed on the London Stock Exchange. The company may use the remaining proceeds, if any, for general corporate purposes. (See Carnival Corporation stock chart on TipRanks)
The maximum number of Carnival plc shares which can be repurchased stands at 18,383,016 shares.
CCL intends to sell its shares in the Offering only when the ordinary shares of Carnival plc are trading in the United Kingdom at a discount to its common stock. Both Carnival Corporation and Carnival plc will derive an economic benefit from the Offering and the use of its proceeds.
Stifel Nicolaus analyst Steven Wieczynski recently reiterated a Buy rating on the stock and lifted the price target to $39 (51.3% upside potential) from $37. The analyst believes the recent sell-off of the company’s stock represents a lucrative buying opportunity since he does not expect any more dilutive equity/debt raises from hereon.
Wieczynski was heard saying, “We expect CCL to emerge from this crisis as a leaner, more efficient company, which combined with our continued confidence in the resilience of global cruise industry demand, strengthens our conviction in owning shares.”
The stock has an overall Hold consensus rating with 6 Buys, 4 Holds, and 3 Sells. The average Carnival Corp price target of $30.10, which implies 16.8% upside potential from current levels. Shares have gained 57% over the past year.
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