What Happened?
Shares of cruise ship company Carnival (NYSE: CCL) jumped 3.9% in the afternoon session after Argus Research Company maintained its buy rating and raised its price target on the stock to $40 from $30.
The analyst's confidence is supported by Carnival's recent strong performance, with the company reporting record-breaking revenue of $6.3 billion and customer deposits of $8.5 billion in its fiscal second quarter. The company has also been effectively managing expenses and paying down debt, strengthening its financial position. The positive sentiment extends across the cruise line industry.
Peer company Norwegian Cruise Line also saw a price target increase from Stifel, which cited the stock as being "massively undervalued." Similarly, analysts maintain a broadly bullish outlook on Royal Caribbean, with a majority of brokerage firms recommending the stock as a 'Strong Buy' or 'Buy'. This industry-wide optimism reinforces the positive outlook for Carnival.
After the initial pop the shares cooled down to $32.62, up 4% from previous close.
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What Is The Market Telling Us
Carnival’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock dropped 2.7% on the news that the major indices continued to retreat (Nasdaq -1.5%, S&P 500 -1.2%) amid profit-taking and renewed concerns about tariffs.
Investors reacted to a federal court ruling that most of President Trump's global tariffs were illegal, raising uncertainty over trade policy and the fiscal impact of potential refunds. Rising Treasury yields added to the pressure, with the 10-year climbing above 4.2% and the 30-year nearing 5%, intensifying worries about stretched equity valuations. September's historically weak track record for stocks further dampened sentiment, leaving traders cautious ahead of the jobs report later in the week and the Federal Reserve's upcoming rate decision.
Carnival is up 30.4% since the beginning of the year, and at $32.62 per share, has set a new 52-week high. Investors who bought $1,000 worth of Carnival’s shares 5 years ago would now be looking at an investment worth $1,844.
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