Shares in Carnival Corp (CCL) took a further hit on Tuesday after the company announced that it is seeking about $6 billion in debt and equity to cope with the Covid-19 fallout. The world’s largest leisure travel company also announced the suspension of both its dividend payouts and the repurchase of its common stock.
Despite these measures, the cruise operator revealed that it is still anticipating a net loss for its fiscal year ending Nov. 30. In addition, Carnival continues to receive lawsuits from passengers who traveled on the coronavirus-stricken Grand Princess and Diamond Princess cruise ships.
Following the news, Wells Fargo’s Tim Conder reiterated his sell rating on the stock without a price target. He commented that he would have preferred that the raise had skewed more towards equity, allowing the company to keep some remaining "dry powder" in the form of debt. According to a statement released on March 31, Carnival has filed for an underwritten public offering of $1.25 billion of shares of common stock.
Year-to-date shares in Carnival have now plummeted by 75%. Yet according to analysts, investors should steer clear from buying the dip. TipRanks reveals that CCL scores a Hold analyst consensus- with 9 hold ratings published in the last three months vs just 1 buy rating and 1 sell rating. The average analyst price target stands at $41.
The news follows an announcement on Monday that the company is suspending operations. "As Covid-19 continues to impact global health and commerce, we are sorry to extend our pause in operations until May 11," the company stated.