Carnival Corp upgraded at JPMorgan as cruise demand shows 'zero signs' of slowing momentum

JPMorgan raised the rating of Carnival Corp (CCL) as there are no indications of a decrease in the demand for cruises.

The analysts at JPMorgan have bumped up their rating on Carnival Corporation's shares from Neutral to Overweight. They have also increased their price target for the stock from $11 to $16 in a message sent to their clients on Monday.

The market experts have increased the price objective of Royal Caribbean (NYSE:) to $103 from $100, and of Norwegian Cruise Line Holdings (NYSE:) to $16 from $15 for every share.

In the beginning of trading on Monday in the United States, the stocks of all three companies experienced an increase.

Experts claimed that their company arranged important executive gatherings with Carnival, Norwegian, and Royal Caribbean during its "Come Cruise w/ Us" occasion held in Miami.

The analysts mentioned that the 'Big 3' had two important messages to convey. Firstly, they had a positive attitude towards the ongoing trend and bookings for the first half of the year 2024. There were no indications of a decrease in momentum, and there was no change in previous lead indicators. The demand from loyal customers that had been postponed due to the pandemic last year had now shifted to new customers who were willing to try out a cruise. Secondly, the Big 3 had enough flexibility in their balance sheets, allowing them to pay off their debts without the need for equity issuance. Moreover, they had ample liquidity, making it easier for them to pay off their debts.

According to their statement, during the visits, the management teams kept talking about the growing demand without indicating any decrease in forward indicators compared to historical measures.

Analysts added that management teams have highlighted the current booking curve as being in the ideal range (typically around 6-9 months). This level of booking visibility provides around 85% insight into bookings for 2023 and roughly 25% into bookings for 2024, based on our calculations. It is worth noting that this level of visibility into bookings that are farther out represents a significant difference from what we see in our analysis of other retail industries.