Home Investing Carnival stock could be worth “$0” in the worst-case scenario: Morgan Stanley

Carnival stock could be worth “$0” in the worst-case scenario: Morgan Stanley


Carnival stock could be worth $0 in worst-case scenario: Morgan Stanley

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Wajeeh Khan

Jun 29, 2022

Morgan Stanley analyst Jamie Rollo is strongly bearish on Carnival Corp.

Pete Najarian agrees with the “sell” call on CNBC’s “Halftime Report”.

Carnival stock is currently down roughly 60% versus the start of the year.

Carnival Corp (NYSE: CCL) is down 15% on Wednesday after a Morgan Stanley analyst warned the stock could be worth “zero dollar” in case of a global recession.

Carnival Corp has over $30 billion in net debt

Jamie Rollo warns the cruise company could lose up to $900 million (EBITDA) this year. If true, fiscal 2022 would be the third consecutive year of Carnival losing money. Revealing his future outlook, he added:

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Our FY23 EBITDA forecast drops 10% to $5.0 billion as we factor in some occupancy pressure from continuing health protocols over the winter, and weaker pricing. [We forecast] a 46% downgrade to FY23 EPS and mid-teens downgrade thereafter.

Rollo warns that Carnival with continue to struggle with over $30 billion of net debt for the foreseeable future. His base case is for $7.0 a share that translates to another 20% downside from here.

Pete Najarian is also bearish on Carnival stock

Agreeing to the “sell” call on CNBC’s “Halftime Report”, Pete Najarian said the inflationary pressures continue to be a significant headwind for the cruise stocks.

Are people really willing to go back? Do they have the discretionary money to go out on these cruise ships? No is the answer most likely. So, all three of them are in a rough spot given how much debt they have on the balance sheet.

Earlier this week, Carnival Corp reported its financial results for the second quarter that came in significantly below the Wall Street estimates. The stock is down more than 60% from its year-to-date high.

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