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The Citi analysts said seaborne leisure travel operators like Carnival are seeing continued positive momentum from COVID rules that shut down business for more than a year.
“As arguably the last remaining COVID reopening story, pandemic tailwinds to the cruise industry are greater than any macro headwinds,” the analysts said, adding that a turnaround effort under new chief executive officer Josh Weinstein is working.
Shares in Carinval gained more than 2% in premarket trading on Thursday.
The analysts also pointed to the “difficult-to-quantify but increasingly evident willingness” of investors to place bets on the cruise industry – and Carnival in particular. This trend will prove to be “a tailwind for valuation” that will be amplified “if/when” Carnival manages to both remove leverage off its balance sheet and deliver earnings that meet or exceed expectations.
