Carnival shares have made up a lot of ground since August and are now trading just before stubborn resistance. While the operational outlook is improving and analysts are giving the green light, it is important for the share price to clear the hurdle now, otherwise there would be another sell-off.
Most recently, on Tuesday, Bank of America (BofA) reiterated its buy recommendation with a price target of $24.00. BofA analysts pointed to stable demand trends and slight positive effects from fuel prices and exchange rates as supporting this valuation.
The cruise industry will see normalized trends in 2024 – the first full year since the corona pandemic in which capacities will be fully utilized. Data from price reviews and aggregated credit and debit card payments also showed that demand remained stable.
BofA therefore revised upward its EBITDA and EPS estimates for the 2024 fiscal year. The bank now expects earnings before interest, taxes, depreciation and amortization to be $5.9 billion instead of the previous $5.8 billion. Its earnings per share forecast was raised 5 cents to $1.23.
Carnival will give an insight into how things are going operationally next Monday, then the cruise giant will present its Q3 figures. The omens are good due to positive updates from rivals such as Royal Caribbean and Norwegian Cruise. However, Carnival should definitely deliver.
The share is about to hit a stubborn technical chart hurdle. As of late Thursday afternoon, the title was trading at around $18.70. In the just above range of $19.20 to $19.70, the bulls have recently gritted their teeth several times. If the hurdle falls as a result of positive Q3 numbers, minor resistance awaits at around $20.60 and $21.50. If these are overcome, the stock could approach resistance in the area of the BofA price target. The price bounced there in February 2022.
Carnival disappoints with its numbers, but a sharper setback is likely. The stock could fall back to the lower end of the recently formed sideways range at around $13.90. On the way there are even weaker supports with the GD50 and the GD200 at $16.63 and $16.36 respectively.
The business environment for the cruise industry has recently improved significantly. It is therefore likely that Carnival will also be convincing with its figures. However, if this fails, the downward pressure would increase. Investors should not take any risks before the Q3 figures. THE SHAREHOLDER favors competitor Royal Caribbean in the industry.
