Bank of America Securities (BofA) sees Carnival Corporation & plc (NYSE:CCL) as well-positioned for long-term upside after a strong first-quarter performance, despite near-term volatility from fuel and macro factors.

Strong Quarter and Strategic Progress

BofA analyst Andrew G. Didora remains bullish on Carnival following its first quarter 2026 results, citing strong execution and compelling long-term upside.

The analyst noted that while near-term volatility from fuel costs and geopolitical tensions may create some uncertainty, underlying fundamentals, demand trends, and long-term growth targets remain strong, supporting an estimated 86% upside.

The company delivered a solid quarter, with an EPS and net yield beat, extending its earnings momentum.

Management also announced a $2.5 billion share repurchase program and introduced its "Propel" initiative, targeting over 50% EPS growth and more than 16% ROIC by 2029—signaling confidence in sustained profitability and capital returns.

Valuation and Price Target

Didora maintains a Buy rating with a $45 price target, implying significant upside. His valuation is based on a 10x EV/EBITDA multiple on 2027 estimates, supported by improving operations, a stronger fleet mix, and ongoing deleveraging. Notably, the stock currently trades at below 7x 2027 EBITDA, near historical trough levels.

Near-Term Risks and Demand Outlook

In the near term, fuel remains the key risk. Carnival is unhedged, making earnings sensitive to oil price fluctuations. Didora projects second-quarter 2026 EPS at 28 cents, below the company guidance of 34 cents due to higher fuel assumptions. Demand trends remain resilient, with no meaningful increase in cancellations.

While geopolitical tensions and higher commodity prices have slightly softened booking momentum, the company is already 85% booked for 2026, providing strong visibility.

Looking ahead, Didora highlights Carnival's capital return potential, with plans to distribute $14 billion through 2029, equivalent to over 40% of its current market value.

Overall, he views current weakness as an opportunity, supported by attractive valuation, improving balance sheet metrics, and steady industry demand, while flagging macroeconomic and cost-related risks.

CCL Price Action: Carnival shares were down 1.36% at $23.86 at the time of publication on Monday, according to Benzinga Pro data.

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