Carnival Dream cruise ship is docked at Port B in Key West, Florida.
Chandan Khanna/AFP via Getty Images
Carnival
stock was tumbling Wednesday after Morgan Stanley cut its price target to a Wall Street-low, saying it sees the case for a stock wipeout.
Morgan Stanley analysts slashed their base case price target to $7, according to Bloomberg, and maintained an Underweight rating on the stock. In a worst, or “bear case” scenario, Carnival’s (ticker:
CCL
) price could reach zero, they added.
The cruise line’s stock could lose all its value if a recession triggers another demand shock, the analysts said in a research note reviewed by Bloomberg. The group’s liquidity could “quickly shrink” if bookings slow or customers withdraw deposits amid a bout of cancellations, the analysts wrote.
A Carnival spokesperson said the company was “making strong progress” as it continued to restart its fleet around the globe.
“There is pent-up demand for cruising and our occupancy levels continue to rise with our Carnival Cruise Line brand at 100% last quarter and forecasting 110% occupancy for the third quarter,” the spokesperson said in an emailed statement.
Carnival stock was down 15% to $8.78 on Wednesday. The shares have lost 56% this year. While they tried to stage a rally when Carnival posted earnings last week, reporting a sharp rise in revenue and booking improvements, they dipped back down this week after Stifel and Wells Fargo both lowered their price targets.
Stifel maintained a Buy rating on the stock, while Wells Fargo kept an Underweight rating. Of the 25 analysts covering the stock, 32% rate it a Buy equivalent, 48% rate it a Hold, and 20% rate it Sell, according to FactSet.
Other cruise stocks were tumbling Wednesday, with
Royal Caribbean
(RCL) down 8.9%, and
Norwegian Cruise Line
(NCLH) falling 9%.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
