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The analysts told investors that the leadership change, supply and demand recovery, and resulting capital pivot drive a significant shift from debt to equity value.
They believe it should position CCL shares as “more broadly investable, which could progress over several years.”
“11 months into his tenure, the new CEO has implemented structural changes to CCL, including a flatter, more efficient reporting structure, which leaves direct reporting relationships for 93% of the company’s total brand capacity to him,” the analysts wrote.
“Fuel costs are a tailwind,” they added. “Decreasing fuel prices, as well as increased fuel efficiency due to an upgraded fleet of newer ships will help improve margins and bring them back to pre-pandemic levels. We expect reduction in fuel consumption to deliver ~$250M savings annually in 2023 vs 2019, and expect to improve further by 2026.”
Despite the strong year-to-date performance, Jefferies believes the journey from a good trade to a long-term investment case remains ahead for CCL.
