Carnival Corp’s (CCL) German cruise line AIDA Cruises announced it will resume sailing operations in August this year.
After AIDA Cruises was forced to pause its operations in mid-March due to the coronavirus pandemic outbreak, three of its ships will restart sailing next month. AIDAperla will be the first to set sail on August 5 from Hamburg, followed by AIDAmar from Rostock-Warnemünde on August 12 and AIDAblu from Kiel on August 16. Bookings for the first short cruises start from today.
The German-based cruise line said it will implement health and safety measures including digital health questionnaire prior to the cruise, temperature measurements before check-in for guests and crew, and physical distancing guidelines and routing systems on arrival and departure. It will also closely manage capacities at venues such as restaurants, bars, theatres, sports and wellness areas. The ships will also be equipped with test-kits and diagnostic devices for the immediate evaluation of suspected COVID-19 cases.
Carnival shares dropped 3.4% to $14.80 in midday U.S. trading. The stock has this year shed 70% of its value following major coronavirus outbreaks on a number of cruise ships, including its Diamond Princess.
Despite the uncertain outlook for the cruise and travel industry, five-star analyst Ivan Feinseth at Tigress Financial reiterated a Buy rating on the shares as he believes that Carnival will overcome COVID-19 pandemic headwinds, and the pullback in the stock creates a long-term buying opportunity.
“While the near-term uncertainty remains, including when CCL will be able to resume sailings, its strong brands, strong leadership, and its industry-leading fleet of ships are still driving strong booking trends,” Feinseth wrote in a note to investors. “Recent capital markets transactions, along with ongoing capital preservation efforts, give CCL more than enough liquidity to overcome the pandemic-led business disruption.”
In the best-case scenario, the analyst expects sailings to resume in early Q4 2020 and in the worst-case in early Q1 2021.
The rest of the Street is sidelined on the stock. The Hold analyst consensus shows 12 Hold ratings and 4 Sell ratings versus 4 Buy ratings. The $16.51 average price target implies 12% upside potential over the coming year. (See CCL’s stock analysis on TipRanks).
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