Carnival Corporation stock

Will Carnival Corporation Stock thrive in 2022?

There have been few industries hit as hard as the travel industry by the COVID-19 pandemic, and shareholders of cruise lines will be the first to tell you that. Carnival Corporation stock (NYSE:CCL) is one of a handful of major brands that dominate the open seas. The stock hit single digits back in the spring of 2020 when COVID-19 was at its peak, and although shares have since rebounded, they have yet to return to pre-pandemic levels. 

Any hesitancy in investing in the travel industry now is well justified. On one hand, you are investing in an industry that plans to return to full health at some point in the future. On the other hand, we are fairly confident that any recurrence of COVID-19 or continuation of variants could cause the entire industry to shut down once again. It is certainly a fine line for any investor to walk. 

A Return to Normalcy in 2022 for CCL Stock

That is what Carnival shareholders are banking on as the company recently announced that it foresees having its full fleet of cruise ships sailing by the spring of 2022. It may also be wishful thinking that by that time global travel will have returned to some semblance of normalcy following the wider distribution of vaccines. One of Carnival’s chief rivals Norwegian Cruise Line Holdings (NYSE:NCLH) reported that it will be launching its full fleet by April at the latest. While it was a slow return to the seas for cruise line companies, things look to be rapidly returning to normal assuming there are not any more roadblocks along the way. 

Carnival recently received a generous stock upgrade from Credit Suisse analyst Benjamin Chaiken, who gave the stock an outperform rating and $41 price target. The analyst did mention that this is more of a long-term price target as he opined that Carnival would return to pre-pandemic levels of profitability once it has passed the phase of providing credited sailings that were missed during the pandemic. Carnival also took the opportunity to rid itself of 19 of its lower-priced ships, which means that the company can focus on charging higher ticket prices for the more top of the line ships in its fleet. This will in turn help to raise margins and hopefully position Carnival to earn as much as $3.00 per share by 2023 as per Wallstreet’s consensus. However, as a comparison, the company was earning about $4.33 per share in 2019 before the pandemic hit. 

CCL stock

Princess Medallion Fleet to bring revenue in 2022

Furthermore, CCL recently announced that an additional three Princess Medallion Class ships will enter the water in early 2022. The Princess Cruise lines will travel between Los Angeles, Seattle, Vancouver and Ft. Lauderdale. This will total 11 Princess Medallion class ships operating as early as April 2022, representing a total of 79% capacity of Princess fleet that will be in the water generating revenue. Looking forward, the company expects to be running at 75% capacity by June next year.

2021 Carnival Corporation Stock Outlook

Overall, Cruise line stocks have been one of the more popular ways to play the reopening, especially now that it looks like Carnival will have its full fleet sailing on the horizon. There is of course the elephant in the room for travel stocks: will people return to cruise ships as they did pre-pandemic? While the demand for global travel is clearly strong, we may see a reduction in more susceptible and immunocompromised travelers. Particularly older age groups who are one of the largest markets for cruise ships. Breakouts of the coronavirus on the first sailings of the reopening did not do much to instill confidence in potential customers. Carnival Corporation will be banking on a return to normalcy in 2022, assuming COVID-19 fears remain at bay.

The information above is presented for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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