Cruise stocks were hot in 2021, but many investors don’t even want to look at Carnival (NYSE:CCL) in 2024. Carnival stock has been directionless and just seems to have lost its way. However, I encourage patience and persistence as Carnival’s shareholders will have their magic moment in due time.
We have to be realistic, as the Carnival share price isn’t likely to revisit its pre-COVID-19 price levels soon. What about a near-term price target of $20, though? It’s possible if Carnival can capitalize on travel-pricing trends, so investors should get on board and prepare for a thrilling trip.
Carnival’s ‘Hugely Symbolic’ Change
First, here’s a news item that might not seem like a big deal, at first glance. However, it could represent a major change for Carnival Carnival in the long run.
In March of 2025, Carnival will “sunset” its P&O Cruises Australia brand and “fold” its Australia-based operations into the company’s flagship Carnival Cruise Line brand. This will allow Carnival to expand and focus on its Carnival Cruise Line brand.
Carnival CEO Josh Weinstein seems to view this as a way for the company to accelerate its build-out. “[G]uest demand remains incredibly strong so we’re leveraging our scale in an even more meaningful way by absorbing an entire brand into the world’s most popular cruise line,” Weinstein explained.
Moreover, Melius Research analyst Conor Cunningham believes that Carnival’s brand realignment “could be the catalyst needed to start a rally.” Cunningham added, “Carnival’s decision to consolidate a brand may appear small at face value, but it is hugely symbolic of the change underway from CEO Josh Weinstein and Co.”
Carnival Could Get a Boost From Budget-Conscious Travelers
Not long ago, Citigroup analyst James Hardiman noticed a trend in the travel market. “The price of a cruise vacation relative to a comparable land-based vacation/hotel stay is as wide as it has ever been, and has expanded significantly since the onset of the pandemic,” Hardiman observed.
Travel expenses are high nowadays. Many people believe they’re getting more bang for their buck from a cruise, as opposed to a land-based trip. That’s a positive trend for Carnival, of course.
Furthermore, this perceived cruise-versus-land-travel price difference could allow Carnival to raise its prices somewhat. Hardiman proposes a compelling argument along this line:
“We would argue that this gap should be smaller than ever given significant advancements made to the cruise experience and, conversely, deteriorating customer satisfaction with traditional hotels/resorts.”
If cruise demand remains robust in 2024 and 2025, Carnival could raise its prices and, therefore, its profit margins. So, investors should keep tabs on travel trends as they may have a durable, positive impact on Carnival.
Carnival Stock: Put $20 on Your Itinerary
It certainly looks like Weinstein wants to consolidate Carnival’s operations into one giant, expanding brand. It won’t happen overnight, but this strategy could pay off big-time for Carnival and its shareholders.
Meanwhile, travel-market trends might enable Carnival to raise its prices and its profit margins somewhat. Given these tailwinds, investors should expect Carnival stock to pick a direction soon — and that direction will be higher.
It’s difficult to time the move, but the Carnival share price should reach $20 sooner or later. It could even happen in 2024’s second half, so start a small share position today.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
