Carnival Corporation delivered a second-quarter adjusted earnings beat, supported by tighter cost controls, modest yield upside, and lower-than-expected fuel expense. JPMorgan analyst Matthew R. Boss maintained an Overweight rating and a December 2026 price target of $43, citing a favorable risk-reward setup despite revenue missing estimates and management lowering its second-half yield outlook due to Europe's weakness tied to the Middle East conflict.

Cost Savings Drive Outperformance

Boss highlighted cost performance as the key positive from the quarter. Reported net yield growth of 4.3% topped the Street’s 4.1% estimate, while constant-currency net yield growth of 2.2% exceeded management’s 2.0% guidance. Adjusted net cruise costs excluding fuel per ALBD rose just 0.1% year over year in constant currency, beating management’s 2.6% guide and the Street’s 2.4% estimate. Fuel expense of $595 million came in below the Street estimate of $637 million and management’s $610 million guide. Management described the savings as structural, with benefits expected to support earnings through fiscal 2026 and beyond.

Guidance and Yield Reset

Carnival raised fiscal 2026 adjusted EPS guidance slightly to $2.22 from $2.21 but cut its full-year constant-currency net yield growth outlook by about 100 basis points to 1.75%. Management linked the reduction to weaker demand for European sailing from the Middle East conflict. Boss said the yield cut represented a 14-cent EPS headwind, offset by second-quarter flow-through, cost savings, and other operational favorability. The revised outlook implies second-half constant-currency net yield growth of about 1.4%, including 1.2% in the third quarter.

Strategic Outlook and Risks

Boss stated that Carnival’s fiscal 2027 fundamentals remain intact, with management pointing to continued booking strength and confidence in its multi-year Propel plan. The $43 price target is based on about 10 times JPMorgan’s 2027 EBITDA estimate, broadly in line with Carnival’s pre-pandemic multiple. Key risks include an economic downturn and significant volatility in fuel and other commodity prices.

Susquehanna analyst Christopher Stathoulopoulos has maintained a Positive rating on Carnival and increased the price target to $33 from $30. The adjustment reflects a revised outlook on the stock's performance potential.

Rating and Target Details

The analyst's recommendation remains Positive, indicating confidence in the company's trajectory. The new price target of $33 represents an increase from the previous target of $30.