Things had been going pretty well for cruise ship operator Carnival Cruise Lines (NYSE:CCL) lately, as customers came back looking for the fun and romance of the open sea once more. As a result, Carnival just made a big bet by ordering a new ship. However, investors weren’t happy and sent shares down nearly 3% in Tuesday afternoon’s trading.
Carnival turned to Meyer Werft, a major German shipbuilder, to pick up a new Excel-class cruise ship, the 10th one that Carnival has in its fleet. This is the first time that Carnival has bought a cruise ship since before the pandemic hit. The new Excel-class boasts room for 6,400 passengers and runs on liquefied natural gas. The ship won’t see service until 2027, but it remains in line with what Carnival calls a “…measured capacity growth strategy.” In fact, Carnival looks to add either one or two new ships per year.
New Ships, New Policies
While this may not be the best time to start augmenting the fleet, Carnival is shaking up its passenger experience as well. It’s issued new rules about the “cruise duck” concept, which is when toy ducks are hidden by travelers around the ship to be found by shipmates. Specifically, it’s not allowing business cards to be included with these ducks.
It has also altered its cruising schedule with regard to Jamaica; recent damage at the Ocho Rios port will instead move cruisers to Falmouth. And an upcoming stop at Nassau—already regarded as a “seen-it” port by many—is now under fire after the U.S. Department of State bumped up its warning level to a Level 2, or an “exercise increased caution” rating.
Is It a Good Idea to Buy Carnival Cruise Line Stock?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CCL stock based on 10 Buys, two Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 26.89% rally in its share price over the past year, the average CCL price target of $21.12 per share implies 40.89% upside potential.
