Morgan Stanley said Carnival’s sharp decline since the outbreak of the U.S.-Iran war has made the stock even more attractive. The bank upgraded the cruise operator from equal weight to overweight, while lowering its price target slightly to $31 from $33, implying an upside of more than 28% from Wednesday’s closing price. Despite the upgrade, Morgan Stanley lowered Carnival’s net earnings yield forecast, believing European demand would be depressed due to the Middle East war and its impact on oil prices. But analyst Jamie Rollo said demand shocks are usually the best time to buy stocks. Since the war began, carnivals have declined by 23%. The move is “similar to declines seen in the Iraq war in 2003, the Arab Spring in 2010, and the Russia-Ukraine war in 2022, and worse than the Gaza conflict in 2023 or the Iran conflict in 2025,” he wrote in a memo Thursday. “If you look at the 12 months after this roughly 30% decline, we’re looking at a 40-120% recovery. Of course, every event is different in magnitude, impact and duration, but directionally, these numbers provide some comfort.” CCL Mountain 2026-02-27 CCL Charts since February 27th. Rollo added that he believes Carnival and the cruise industry as a whole are in a stronger position than in the past to deal with a potential downturn. He cited the relative appeal of cruises compared to other vacations: its simplicity and “safe haven” destinations such as the Caribbean, Western and Northern Europe and Alaska, its ability to add value to pricing, and Carnival’s strong free cash flow. Rollo said the stock has an attractive risk-reward ratio, but warned that next Friday’s earnings report could be tough. “We expect a cautious outlook due to lower guidance due to higher oil prices, which we believe is fully expected,” he said. Carnival stock was slightly positive in premarket trading Thursday.
