© Reuters. Carnival Stock: Timeline for COVID Recovery?
Carnival (NYSE 🙂 (CCL) and the wider space of cruise lines have struggled to recover from the COVID-19 crash.
While many companies’ stocks have soared past pre-pandemic highs, cruise lines have had to continue to grapple with rough waters.
For Carnival, the COVID situation has improved modestly over the last year and a half.
Still, it is too early to determine when the pandemic will enter its endemic stage. Regardless, Carnival is capable of improving its operations amid COVID, and for that reason, I am optimistic. (Check out Carnival’s stock charts on TipRanks)
Any locality that has tried to treat COVID as endemic since then has regretted its decisions. More variants can be expected over the next year, and for that reason, cruise lines, which are arguably one of the riskiest reopening actions, remain clouded by uncertainty.
This could change with the advent of an innovative COVID treatment, such as an oral treatment being developed by the producer of the Comirnaty COVID-19 vaccine. Pfizer (NYSE :). Such a breakthrough could boost cruise line stocks vertically in a short period of time.
However, even if a pill got the green light next year, it is not yet known whether certain groups would be willing to take it. As such, investors should be cautious when attempting to bet on a parabolic move on a name like Carnival, despite the cruise resumption.
Last week’s news of an earlier than expected return of the new Seabourn Encore cruise ship bodes well for operations amid COVID.
Carnival has also strengthened its balance sheet with the divestment of several old cruise ships. Undoubtedly, the liquidity and solvency situation has improved, and the company now has a liquidity and liquidity ratio of 1.2.
In fact, it looks like the sails are set for Carnival to return to its pre-COVID highs. Advance bookings have risen and more pent-up demand is likely to have a chance to be met between waves of COVID.
Things are finally looking up, although new variants and future waves could spoil the recovery.
Taking of Wall Street
According to TipRanks Consensus Analyst Rating, CCL’s stock remains on hold. Out of eight analyst ratings, there are three buy recommendations, two retention recommendations, and three sell recommendations.
Carnival’s average price target is $ 28.04. Price targets for analysts range from a low of $ 18.30 per share to a high of $ 39 per share.
Analysts do not expect Carnival stock to go smoothly, with as many sales as purchases allocated.
Still, for those optimistic that the cruise can operate somewhat efficiently in the new normal, the risk / reward on a resilient cruise line like Carnival may seem too good to pass up.
Disclosure: Joey Frenette does not own any stock in any of the companies mentioned at the time of publication.
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