Why This Top Analyst Expects Carnival Stock To Explode 86%

Core Viewpoint - BofA analyst Andrew G. Didora remains optimistic about Carnival's prospects following strong first quarter 2026 results, highlighting strong execution and long-term growth potential with an estimated 86% upside [1] Financial Performance - The company reported a solid quarter, exceeding EPS and net yield expectations, and announced a $2.5 billion share repurchase program [2] - Management introduced the "Propel" initiative, aiming for over 50% EPS growth and more than 16% ROIC by 2029, indicating confidence in sustained profitability [2] Valuation and Price Target - Didora maintains a Buy rating with a price target of $45, suggesting significant upside potential [3] - The valuation is based on a 10x EV/EBITDA multiple on 2027 estimates, supported by improving operations and a stronger fleet mix [3] - The stock currently trades below 7x 2027 EBITDA, near historical trough levels [3] Demand Outlook and Risks - Fuel prices pose a key risk as Carnival is unhedged, making earnings sensitive to oil price fluctuations [4] - Didora projects second-quarter 2026 EPS at 28 cents, below company guidance of 34 cents due to higher fuel assumptions [4] - Despite geopolitical tensions and higher commodity prices slightly softening booking momentum, Carnival is 85% booked for 2026, providing strong visibility [5] Capital Return Potential - Carnival plans to distribute $14 billion through 2029, which is over 40% of its current market value, highlighting significant capital return potential [5] - Current market weakness is viewed as an opportunity due to attractive valuation and improving balance sheet metrics [6]