HSBC Raises Carnival to Buy, $30.10 Target Implies 19% Upside
Carnival's fourth-quarter net yield rose 2.7% year-over-year and onboard spending jumped 8.3%, driving a 5.1% rise in adjusted EBITDA despite higher fuel costs. HSBC upgraded the cruise operator to Buy, citing a $30.10 price target implying 19% upside, backed by a $2.5 billion buyback and 10% free-cash-flow yield.
1. Upgrade and Price Target
HSBC moved Carnival’s rating from Hold to Buy with a $30.10 per share target, implying roughly 19% upside from current levels. The new valuation is based on a 9.0x EV/EBITDA multiple, reflecting confidence in the company’s cost discipline and demand resilience.
2. Fourth-Quarter Performance
In the fourth quarter, net yield climbed 2.7% year-over-year and onboard spending increased 8.3%, contributing to a 5.1% rise in adjusted EBITDA. Customer deposits grew 9% to $7.5 billion, underpinning stronger liquidity and operational flexibility.
3. Outlook, Leverage and Capital Returns
While 2026-27 earnings forecasts were trimmed by about 9% due to fuel costs projected 20% above prior assumptions, leverage is expected to fall from 7.0x in 2023 to 2.6x by 2027. The company plans a $2.5 billion share repurchase and targets a 10% free-cash-flow yield, with 85% of 2026 bookings already secured at solid pricing.