Why Carnival Stock dived underwater on Friday

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What happened

Typically, when an analyst raises a target price for a stock, they get a nice increase on the same day. This was not happening with a struggling cruise ship operator Carnival (NYSE: CCL)(NYSE: CUK) on Friday, however. The company continues to be the victim of the gloom of investors.

So what

Truist Securities was the entity that changed its price target. The investment bank now estimates Carnival is worth $ 20 per share, up from the previous estimate of $ 18. This doesn’t change Truist’s overall outlook on stocks, however, as he leaves his sell recommendation unchanged. It’s no wonder that the $ 20 per share level is lower than the Thursday closing price of $ 22.71 for Carnival stock.

Image source: Getty Images.

It was not immediately clear why Truist improved its price target. It might have something to do with Carnival’s announcement earlier this week that it plans to operate its fleet up to 75% of its capacity by the end of this year.

That’s a huge improvement from 0% at the height of the pandemic, but it’s not necessarily encouraging for investors who were expecting a strong comeback for the travel and tourism industry this year.

Now what

Meanwhile, Carnival is engaged in a legal battle with the Florida government over the state’s ban on requiring proof of vaccination from clients. As the company intends to operate cruises with 100% vaccination rates, the ban really hampers its efforts. Carnival has done a good job so far in surviving the pandemic, but its navigation will be anything but smooth as it moves towards recovery.

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Eric Volkman does not have a position in any of the stocks mentioned. The Motley Fool recommends carnival. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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