Morgan Stanley Upgrades Carnival After 28% YTD Slide, Cites FY27 P/E <10x
Morgan Stanley upgraded Carnival to Overweight after its shares fell 28% YTD, citing FY27e P/E below 10x and comparing the drop to past conflict-driven rebounds of 40–120%. The firm cut FY26 and FY27 EPS forecasts by 14% and 6% and lowered price targets to $31 and 2,350p.
1. Upgrade Rationale and Valuation Context
Morgan Stanley raised its rating on Carnival to Overweight after a 28% year-to-date share decline from peak levels. The firm noted that shares now trade below 10 times FY27 earnings estimates and compared the pullback to historic drops during past regional conflicts, which subsequently saw rebounds of 40–120%.
2. Revised Forecasts and Target Prices
The firm lowered its EPS forecasts by 14% for FY26 and 6% for FY27, trimmed its net revenue yield assumption by 100 basis points to 2.0%, and cut its price targets to $31 for U.S. shares and 2,350p for U.K. listings. It highlighted limited Middle East exposure of 1–2% of capacity and noted that each $10-per-barrel change in oil price affects FY26 EPS by about 5%.