Carnival Stock Sails Higher Thanks to CEO Comments

The security currently sports affordably priced options

Digital Content Manager
Mar 15, 2021 at 11:30 AM
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The shares of Carnival Corp (NYSE:CCL) are up 3.6% at $29.47 at last check, after CEO Arnold Donald told the Financial Times he sees at least another two tough years for the cruise industry. However, he also said the company's full fleet could be sailing by the end of 2021, though it will likely take until 2023 for revenue to return to what it once was pre-coronavirus.

On the charts, the equity has been sailing higher since February, with the 20-day moving average acting as support and containing CCL's latest pullback. The security is now trading at its highest level since March 2020. Longer term, CCL sports an impressive 69.9% year-over-year lead.

A shift among the brokerage bunch could keep the wind at the equity's back. Of the 12 analysts in coverage, nine carry a tepid "hold" or worse rating. Plus, the 12-month consensus target price of $20.78 is a 30.5% discount to current levels. This leaves the door wide open for price-target hikes and/or upgrades going forward.

Meanwhile, short sellers are jumping ship. Short interest fell 15.6% over the last two reporting periods, yet the 59.16 million shares sold short still make up 11.2% of the stock's available float. If short interest continues to unwind, shares can move even higher.

The options pits are firmly in the bullish camp, with calls popular. This is per Carnival stock's 50-day call/put volume ratio of 4.31 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands in the highest percentile of its annual range.

Finally, CCL options can be had for a bargain at the moment. The equity's Schaeffer's Volatility Index (SVI) of 78% sits higher than only 7% of all other readings from the past year. This means options players are pricing in lower-than-usual volatility expectations right now.

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