Carnival Corporation: 2Q Beat w/ 2H "Transitory" Reset; OW

Research evidence excerpt

Carnival Corporation: 2Q Beat w/ 2H "Transitory" Reset; OW

ial increase in bookings for European deployments next

year, with CEO Weinstein citing “no change in my confidence” for the multi-year

PROPEL plan which calls for “moderate” yield growth FY26-29. Looking at this another

way, FY26’s net yield growth outlook of +1.75% constant-currency adjusted for (i) 50bps of

negative impacts from changes to Arabian voyages and the loyalty program and (ii) 100bps

of headwinds from the Middle East knock-on effect to demand, equates to “underlying” yield

growth of +3.25% constant-currency (in-line with mgmt’s “moderate yield” growth

algorithm). Further on costs, mgmt cited cost efficiencies in 2Q will continue to benefit

earnings throughout FY26 and “beyond”, with cost savings translating to a structurally

lower base, with CFO Bernstein citing “hundreds of items across the business which we

view as permanent cost savings in the future”.

Put together - our FY27 net yield growth forecast is +2.9% c/c, reflecting +3.25% c/c

“underlying” yield growth from FY26 sustained into FY27, offset by a ~40bps negative

impact from the loyalty program change (vs. Street +2.7% net yield growth c/

c). Specifically, CEO Weinstein noted European bookings “over the same time that we saw

really big kind of pause for a lot of folks for 2026, we saw almost a doubling down for 2027

at historic highs for price and occupancy for 2027.” Further, we model NCC ex. Fuel cost

growth of +2.2% c/c (vs. Street +2.2%), aligned to management’s +LSD% cost growth

CAGR within the PROPEL plan, with mgmt confirming zero change to the algorithm and

structural initiatives in place multi-year across the top and bottom-line, in our view.

Model Implications: We model FY26 adj. EPS of $2.23 (vs Street at $2.23) and FY27 EPS