Carnival stock is suffering its worst year on record, creating an ‘incredible buying opportunity’

And with a week to go in 2022, the stock CCL, -0.89% has tumbled 61.2% this year, putting it in danger of breaking the yearly-record drop of 57.4% in 2020, when the pandemic shut its business down. It has underperformed its peers by a wide margin, as shares of Royal Caribbean Group RCL, +0.59% have lost 35.2% year to date and Norwegian Cruise Line Holdings Ltd. NCLH, -0.54% have dropped 37.3%. The S&P 500 index SPX, +0.59% is down 19.6% this year.

Stifel’s Wieczynski said that weakness, despite a healthy liquidity profile, compelling new leadership under Chief Executive Josh Weinstein and improving fundamentals heading into the peak cruise-promotion season during the first quarter of the new year (known as Wave Season), has presented investors with “an incredible buying opportunity” heading into 2023.

“Booking volumes and pricing continue to accelerate, and we don’t see any reason why that shouldn’t continue into Wave Season,” Wieczynski wrote in a recent note to clients.

With expectations remaining subdued, he expects the company to be a “solid beat and raise story” over the next 12 months.

“At this point, we believe the setup for CCL [Carnival’s stock] heading into 2023 is overly compelling,” Wieczynski wrote. “CCL has essentially derisked most of 2023 and post today, estimates should get reset to levels that we believe should be achievable/beatable.”

Wieczynski reiterated the buy rating he’s had on the stock since before the pandemic. He kept his stock price target at $18, which implies about 130% upside from current levels.

“Combined with our continued belief in the resilience of core global cruise industry consumer demand, we encourage investors to take advantage of the current dislocation in CCL’s share price/valuation to add to positions for the long term, and believe current trading levels have already discounted in a slowdown on the macro backdrop,” Wieczynski wrote.