Three of Carnival’s cruise lines have extended the pause of their global operations into next year in reaction to the U.S. Centers for Disease Control and Prevention’s (or CDC) “Framework for Conditional Sailing Order,” which is related to the resumption of U.S. cruise operations amid rising COVID-19 cases. Carnival shares fell 4.5% on Friday, Nov. 20.
Carnival’s (CCL) Princess Cruises is canceling its operations to “allow time for the estimated preparation needed for completing required activities prior to sailing and taking into consideration the temporary seven-day cap on itineraries that call at a U.S. port.” The impacted cruise operations include all cruises sailing through Mar. 31, 2021, all cruises longer than seven days sailing in and out of U.S ports through Nov. 1, 2021 and cruises departing in and out of Japan through Jun. 25, 2021.
The CDC has warned that people should avoid cruise ship travel as the risk of COVID-19 is very high on liners. It has advised passengers who decide to go on a cruise to get tested 3-5 days after their trip and stay home for 7 days after travel, even if they test negative. (See CCL stock analysis on TipRanks)
Meanwhile, Carnival’s ultra-luxury Seabourn line announced that it will cancel a series of 2021 voyages for two ships in its fleet—Seabourn Odyssey (select voyages canceled from Jan. 16, 2021 – Nov. 5, 2021) and Seabourn Quest (voyages longer than 7 days are being canceled).
Also, the company’s Holland America Line is extending its pause of cruise operations for all departures through Mar. 31, 2021.
Meanwhile, UBS analyst Robin Farley raised the price target on Carnival stock to $19 from $16 on Nov. 20 and reiterated a Neutral rating.
The Street is sidelined on CCL shares, with a Hold analyst consensus based on 1 Buy, 8 Holds and 1 Sell. Shares have dived 65.8% year-to-date and the average price target of $15.67 implies further possible downside of about 10% in the months ahead.
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