Shares of Carnival Corp. (CCL) fell 0.7% in premarket trading Monday, after Stifel Nicolaus analyst Steven Wieczynski "drastically" lowered his estimates to take account for the negative effects of a potential recession on the cruise operator. The stock pulled back after soaring 12.4% on Friday on the back of an upbeat business update. Wieczynski reiterated the buy rating he's had on the stock for at least the past three years, or before the pandemic, but slashed his price target to $20, his lowest target since April 2020, from $30. Wieczynski cut his estimates for earnings before interest, taxes, depreciation and amortization (Ebitda) for 2022 to negative $244 million from positive $103 million, for 2023 to $4.16 billion from $5.00 billion and for 2024 to $5.27 billion from $6.34 billion, all well below consensus analyst estimates, as he believed it prudent to "clear the decks." "What we mean by that statement is that given where investors expectations are for [Carnival] and the general cruise industry, we believe it makes sense to now incorporate a recessionary environment into our estimates given we believe that is already somewhat priced into shares," Wieczynski wrote in a note to clients. Carnival's stock has tumbled 46.1% year to date through Friday, while shares of rivals Royal Caribbean Group (RCL) have dropped 45.7% and Norwegian Cruise Line Holdings Ltd. have declined 36.3% and the S&P 500 has lost 17.9%.
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