Stifel Says COVID Could Be Positive For Carnival, Sees 50% Share Upside

Stifel analyst Steven Wieczynski lowered the firm's price target on Carnival (CCL) to $24 from $30 and keeps a Buy rating on the shares. The new price target still represents 50% upside in the shares.

The COVID-19 outbreak could prove to be a net long-term positive for Carnival, Wieczynski tells investors in a research note. "No, we aren't crazy or suffering from some sort of home lockdown psychological disorder, so hear us out," says the analyst in a research note. Wieczynski believes that although COVID-19 "will undoubtedly" negatively impact cruise industry demand well into fiscal 2021, it has the potential to "accelerate the rate of change in several areas" that have long served as overhangs on Carnival shares, namely its "inefficient" cost structure, older hardware and "daunting" near-term capacity growth outlook.

As a result, the analyst expects Carnival to emerge from the COVID-19 crisis as a "leaner and more efficient company." When combined with the "resilience of global cruise industry demand," Wieczynski has "conviction in recommending new ownership of the shares at current levels."

Disclosure: None.

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