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Wells Fargo Upgrade Floats Carnival Cruise Lines Investors’ Boat

For a while, it appeared that a handful of governments were prepared to end the concept of cruise lines entirely, and Carnival Cruise Lines (NYSE:CCL) seemed to be no exception. However, recent developments have turned the tide, and despite volatility, Carnival is up over 6% so far in Tuesday afternoon’s trading, thanks to a shift at Wells Fargo (NYSE:WFC).

Analyst Daniel Politzer and his team at Wells Fargo have revealed that Carnival’s balance sheet is looking much better than it did recently. Politzer notes that Carnival no longer requires significant refinancing and has a lot less floating-rate debt, which means its need to raise funds has reduced. Furthermore, Politzer is now even referring to the business as “resilient.” In addition, Carnival’s recent earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for fiscal year 2023, ranging from $3.9 billion to $4.1 billion, is considered “reasonable.”

This is exciting news, especially since shares fell yesterday on the announcement of projected fiscal year 2023 earnings, suggested to come in at a loss of between $0.28 and $0.44 per share.

It is worth noting, however, that losses have been decreasing for some time. Although Carnival lost $0.55 per share this quarter, this is significantly less than the $1.66 per share it lost this time last year. Furthermore, it posted the highest volume of bookings for any quarter in its history, indicating that a comeback may be on the horizon.

That’s a point not lost on analysts. Analyst consensus calls Carnival Cruise Lines a Moderate Buy. Further, it’s got 32.9% upside potential, thanks to its average price target of $12.32.


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