Wall Street analysts have pointed to continued earnings momentum and an improving long-term outlook following Carnival Corp’s (NYSE:CCL) first-quarter 2026 results, while noting that fuel costs remain a key source of near-term uncertainty.
Bank of America maintained its ‘Buy’ rating and $45 price target on the cruise operator, describing the quarter as characterized by “several positives,” including a continuation of earnings momentum, a new $2.5 billion share buyback program and updated long-term targets under the company’s Propel initiative. The firm noted that first-quarter performance included an improvement in earnings per share and net income, reinforcing recent trends.
At the same time, the bank’s analysts warned that “short-term fuel will create earnings volatility,” adding that higher energy prices and geopolitical factors could leave some consumers in a “wait-and-see mode.” They characterize these pressures as short-term and pointed to valuation, stating that shares are trading near all-time lows.
Turning to operations, Bank of America said booking trends have not deteriorated materially, although demand may have been somewhat weaker than it otherwise would have been due to macroeconomic factors. The company remains 85% booked for 2026, which analysts say will allow time for normalization.
The firm also highlighted Carnival’s updated “Propel” targets, which call for more than 50% earnings per share growth through 2029 and a return on invested capital of more than 16%. Bank of America estimates this implies an annual EPS growth rate of about 10%, with capital returns of around $14 billion over the period, equivalent to more than 40% of the company’s current market capitalization.
UBS also highlighted the strength of the first quarter results and their implications for full-year forecasts.
The analysts noted that Carnival raised its fiscal 2026 performance outlook by 25 basis points to 2.75%, “largely following the pace of the first quarter,” although they added that the magnitude of the quarterly outperformance likely exceeded expectations.
The firm also highlighted improved cost performance excluding fuel, with cruise net cost guidance benefiting from first-quarter trends. However, higher fuel prices remain a significant offset, with UBS estimating about $500 million in additional fuel costs for the year, partially mitigated by about $150 million in stronger operating performance.
Despite these pressures, UBS said Carnival remains on track to achieve approximately $7 billion in EBITDA by fiscal 2026, only modestly below previous expectations, with earnings per share reduced less than the increase in fuel costs.
