Carnival Stock Remains Down 60% From Pre-Covid Highs. Is There An Opportunity?

Carnival Stock Remains Down 60% From Pre-Covid Highs. Is There An Opportunity?

Carnival stock (NYSE: CCL), the largest cruise line operator in the U. S., has seen its stock trail the market considerably this year declining by about 15% year-to-date. Moreover, unlike the broader S&P 500 which has actually gained over 35% from the pre-Covid highs seen in mid-February 2020, Carnival stock has lagged considerably, remaining down by about 58% from its pre-Covid levels. The underperformance comes despite the gradual resumption of cruises since the summer and a relatively strong outlook for 2022, with the company noting that bookings for the second half of 2022 were ahead of pre-pandemic levels. Carnival has also indicated that it was likely to be cash-flow positive and profitable in 2022. So is there an opportunity here for investors? While Carnival's depressed stock price and strong bookings for next year are positives, we think that the trajectory of the Covid-19 pandemic will continue to cloud the company's business in the near term. Covid-19 is also proving much harder to contain than initially expected. A more infectious new strain of the coronavirus, called Omicron, has been identified recently and there are concerns that this could potentially render Covid-19 vaccines less effective. The cruising industry remains particularly vulnerable, given