Stifel maintains Buy rating on Carnival stock, sees $2.50 EPS potential

Carnival Corporation (CCL) reported strong Q3 2025 earnings, exceeding analyst expectations, and provided positive forward guidance through 2027, citing robust booking strength for 2026. Despite these strong fundamentals and multiple analyst upgrades, including Stifel reiterating a Buy rating, the stock experienced a post-earnings selloff driven by market concerns over projected 2026 cost pressures and pricing. Analysts, however, view the shares as undervalued based on expected free cash flow generation, suggesting the recent dip presents a tactical long-term buying opportunity.

Analysis

Carnival Corporation (CCL) presents a dichotomous situation where strong current performance and a bullish analyst consensus are at odds with negative short-term market sentiment. The company reported a solid third-quarter 2025 earnings beat, with an EPS of $1.43 against a $1.32 forecast and revenue of $8.2 billion surpassing the anticipated $8.09 billion. Despite this, the stock sold off due to market concerns over projected cost pressures for 2026. This market reaction contrasts sharply with the company's positive forward-looking commentary on booking strength for 2026 and early 2027, which shows no signs of slowing consumer demand. Underscoring this positive outlook, multiple analysts have reiterated buy-equivalent ratings, with Stifel setting a $38 price target and projecting a potential EPS above $2.50 next year. Supporting the bullish case are strong underlying fundamentals, including a low PEG ratio of 0.23, seven upward earnings revisions from analysts, and a "GREAT" overall health score from InvestingPro, suggesting the market's focus on future cost headwinds may be overshadowing current operational strength and growth potential.

Key Decisions for Investors

• Investors could view the post-earnings share price decline as a tactical long-term buying opportunity, aligning with several analyst recommendations that frame the stock as undervalued based on its free cash flow potential and strong booking trends.
• It is crucial to monitor future company guidance and industry reports for concrete evidence of the cost pressures projected for 2026, as this remains the primary headwind creating the disconnect between fundamentals and stock performance.
• Given the low PEG ratio of 0.23 and upward earnings revisions, long-oriented investors should assess whether the market is overly penalizing the stock for potential future costs, which an analyst noted the company has a history of forecasting conservatively.