BofA Securities analyst Andrew G. Didora expects fuel costs to weigh on Carnival Corporation's (NYSE:CCL) first quarter 2026 earnings, while maintaining a constructive demand outlook, a Buy rating and a $45 price target, implying about 86.6% upside.

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Q1 Outlook and Fuel Cost Pressure

Carnival will report results on March 27 as the first unhedged, commodity-exposed travel company to guide in the current environment. Didora expects fuel, near-term demand and regional pricing to be key focus areas.

Elevated fuel prices prompted him to cut 2026 EPS to $2.06 from $2.53 and reduce EBITDA by roughly $650 million to $7.03 billion.

For the first quarter, he largely holds estimates steady, projecting EBITDA of about $1.26 billion, slightly above guidance, and EPS of 17 cents in line with consensus. He expects net yields to rise 1.9% and cruise costs to increase 5.2%.

Demand Trends and Longer-Term Forecast

Didora highlights Carnival's sensitivity to fuel volatility and raised fuel cost assumptions for the rest of 2026 following higher Brent prices.

Despite this, he sees demand trends as supportive, with onboard spending and regional performance — particularly in Europe and Alaska — remaining key areas to watch.

Looking beyond near-term pressures, Didora points investors to 2027 normalization, forecasting EPS of $2.64 in 2027 and $3.01 in 2028.

He values the stock using a 10x multiple on 2027 EBITDA, consistent with historical averages, supported by improved fleet mix, normalized earnings power and continued deleveraging.

Market Reaction and Earnings Context

Travel stocks, including Carnival and Royal Caribbean, rose nearly 5% in premarket trading on Monday as easing fuel costs improved margin expectations.

The gains followed a sharp drop in oil prices after President Donald Trump announced a five-day pause on strikes against Iranian energy infrastructure, signaling potential de-escalation. WTI crude fell more than 8% to around $90 per barrel.

Carnival reports first-quarter results on Friday, with analysts expecting EPS of 18 cents on $6.13 billion in revenue. The company has beaten estimates for eight straight quarters, including fourth quarter EPS of 34 cents, beating the 25-cent estimate.

CCL Price Action: Carnival shares are trading 6.36% higher at $25.65 at publication on Monday.

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