Cruise line giant Carnival Corporation (NYSE:CCL) experienced a surge in early afternoon trading on Tuesday following an upgrade from Argus, which revised its rating on the stock from Hold to Buy, citing undervaluation as the key driver behind the decision.
According to analyst John Staszak, the upgrade reflects Carnival’s increased investment in marketing, a strategic move expected to significantly boost the company’s revenue. Staszak also highlighted the improved liquidity of $7.3 billion at the end of the second quarter and ongoing debt reduction efforts as major factors that could enable Carnival (NYSE:CCL) to steer clear of the need to issue new shares.
In addition to these measures, Carnival has been diligently working on enhancing the efficiency of its fleet. Staszak provided an update, stating that the company has divested 20 older, less fuel-efficient ships over the past three years and replaced them with a dozen higher-yielding vessels.
As a result of its positive assessment, Argus raised its earnings per share (EPS) estimate for Carnival in fiscal year 2023 to $0.08 from $0.06, and for fiscal year 2024 to $1.02 from $0.98. The new price target for Carnival (NYSE:CCL) has been set at $21. It is worth noting that while Carnival has temporarily suspended share buybacks and dividend payments, Argus anticipates that the suspension of dividends will not be a long-term arrangement.
On Tuesday, Carnival’s stock (NYSE:CCL) witnessed a gain of 2.35%, closing at $18.13. Year-to-date, the stock has soared by an impressive 129%. It is worth mentioning that the short interest on the cruise line stock currently stands at 10.08% of the total float, with the 52-week high noted at $19.55.
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Author Faith Yakubu 
