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Carnival Stock Slumps as Morgan Stanley Contemplates Dire Bear Case

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Carnival Dream cruise ship is docked at Port B in Key West, Florida.

Chandan Khanna/AFP via Getty Images


Carnival

stock was tumbling in premarket trading Wednesday after Morgan Stanley cut its price target to a Wall Street-low, saying it sees the case for a stock wipeout.

Morgan Stanley analysts slashed their base case price target to $7, according to Bloomberg, and maintained an Underweight rating on the stock. In a worst, or “bear case” scenario, Carnival’s (ticker:


CCL

) price could reach zero, they added.

The cruise line’s stock could lose all its value if a recession triggers another demand shock, the analysts said in a research note reviewed by Bloomberg. The group’s liquidity could “quickly shrink” if bookings slow or customers withdraw deposits amid a bout of cancellations, the analysts wrote.

A Carnival spokesperson didn’t immediately respond to Barron’s request for comment.

Carnival stock was down 7.6% to $9.55 in premarket trading. The shares have lost 49% this year. While they tried to stage a rally when Carnival posted earnings last week, reporting a sharp rise in revenue and booking improvements, they dipped back down this week after Stifel and Wells Fargo both lowered their price targets.

Stifel maintined a Buy rating on the stock, while Wells Fargo kept an Underweight rating. Of the 25 analysts covering the stock, 32% rate it a Buy equivalent, 48% rate it a Hold, and 20% rate it Sell, according to FactSet.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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