On Tuesday, Carnival Corporation (NYSE:CCL) received a vote of confidence from William Blair, with the firm maintaining an Outperform rating on the cruise operator's stock. This endorsement follows Carnival's announcement of third-quarter earnings that surpassed market expectations, highlighted by record revenue and profits.
The company reported a significant 26% increase in operating income per average lower berth day, reaching the highest level in 15 years. Additionally, constant-currency net yields went up by 8.7%, aligning with consensus estimates and exceeding the company's own forecast of around 8%. Net per diems on a constant-currency basis also saw a 6% increase due to moderate rises in both ticket prices and onboard spending.
Carnival's financial performance was further bolstered by strong close-in pricing and enhanced onboard spending across the Atlantic. Occupancy rates climbed to 112%, with a notable five-percentage-point improvement observed in European brands. The company also experienced a surge in both repeat and new guests, with new guest growth accelerating to 17%, up from 10% in the previous quarter.
In terms of cost management, Carnival managed to keep constant-currency net cruise costs excluding fuel relatively flat, which was significantly better than the anticipated 4.5% increase. This was attributed to cost-saving initiatives, the mitigation of inflationary pressures, the impact of some minor one-time items worth approximately $20 million, and the deferment of $25 million in expenses to the fourth quarter.
As a result of these positive outcomes, Carnival's adjusted EBITDA and adjusted EPS both exceeded guidance by 6% and 11%, respectively. The company's robust third-quarter performance, along with the optimistic outlook from William Blair, suggests a strong operational rebound for the cruise line industry leader.
In other recent news, Carnival Corporation has been making significant strides in the financial world. The company reported a record-breaking third-quarter performance for 2024, with revenues reaching nearly $8 billion, a substantial increase of $1 billion from the previous year. The company's net income also surged by over 60%, and nearly 99% of its ticket revenue for the year has been secured.
Barclays has raised its price target on Carnival shares to $26, maintaining an Overweight rating, following the company's strong quarterly performance. The firm anticipates that Carnival's journey towards improving its investment-grade status could significantly influence the company's shares. Meanwhile, Goldman Sachs also upgraded its price target for Carnival stock to $24, maintaining a Buy rating.
The investment bank highlighted several positive trends for the cruise operator, including robust booking and pricing momentum, a 17% increase in new cruise passengers in the quarter, and a 6.4% growth in onboard spending per passenger cruise day.
In other developments, Carnival is set to launch the Sun Princess and a new destination, Celebration Key, which are expected to support high occupancy and pricing in 2025.
InvestingPro Insights
Carnival Corporation's strong third-quarter performance is further supported by recent data from InvestingPro. The company's market capitalization stands at $21.21 billion, reflecting its significant presence in the cruise industry. Carnival's revenue for the last twelve months as of Q3 2024 reached $24.48 billion, with an impressive revenue growth of 22.18% over the same period.
InvestingPro Tips highlight Carnival's position as a prominent player in the Hotels, Restaurants & Leisure industry, aligning with its market-leading status mentioned in the article. The company's profitability over the last twelve months and analysts' expectations of continued profitability this year corroborate the positive earnings report discussed.
Another InvestingPro Tip indicates that six analysts have revised their earnings upwards for the upcoming period, suggesting continued optimism about Carnival's financial trajectory. This aligns with William Blair's Outperform rating and the company's record-breaking third-quarter results.
For investors seeking more comprehensive insights, InvestingPro offers 7 additional tips for Carnival Corporation, providing a deeper understanding of the company's financial health and market position.
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