Mar. 19 at 4:19 PM
Morgan Stanley upgraded Carnival to Overweight, citing a more attractive risk-reward after a sharp ~28% YTD stock decline that exceeds recent EPS estimate cuts for FY26 and FY27.
Analyst Jamie Rollo noted the drop mirrors past geopolitical shocks (Iraq War, Russia–Ukraine, Arab Spring), after which Carnival saw strong rebounds. The stock now trades below 10x FY27 earnings.
Despite lowering earnings forecasts, price targets (
$31 US / 2,350p UK), and trimming FY26 net yield assumptions due to weaker European demand, early checks show no widespread cancellations.
Carnival has limited Middle East exposure (1–2% capacity), but remains highly sensitive to fuel prices, with a
$10/barrel move impacting FY26 EPS by ~5%.
Morgan Stanley sees a setup similar to past demand shocks, where ~30% declines led to 40–120% rebounds.
$CCL $MS