Wm. Blair singles out demand creation as Weinstein's hallmarkWm. Blair singles out demand creation as Weinstein's hallmark

The note followed investor meetings with Weinstein and SVP Investor Relations Beth Roberts. 

Advertising spend ramped up

'To narrow a yield gap that is 20%-plus versus its publicly traded peers, the company has ramped up its ad spend per [available lower berth day] about 18% since 2019, which has contributed to new-to-cruise (historically about one-third of guests) growing at a faster rate than repeat guests,' William Blair analyst Sharon Zackfia said. 

'The increased spend has also contributed to Carnival’s record booked position, with the company booked above the top end of historical ranges,' she added. By pulling the booking curve forward, this supports 'much higher pricing across the curve.'

Ahead of three-year targets

Last year, Carnival issued three-year targets to increase adjusted EBITDA per available lower berth day by 50% while achieving an adjusted return on invested capital of roughly 12%, predicated on low- to mid-single-digit annual yield growth combined with low-single-digit cost growth. 

'With a strong start to fiscal 2024, Carnival is tracking ahead of those targets with fiscal 2024 guidance implying a 25%-plus increase in adjusted EBITDA per ALBD versus 2023 and ROIC of about 9%,' Zackfia said.

Higher onboard spending

Onboard spending is up mid- to high-teens since pre-pandemic and Zackfia said the new Celebration Key 'should further bolster onboard revenue and potentially create a halo around ticket prices,' possibly mirroring Royal Caribbean's Perfect Day at CocoCay.

William Blair reiterated its 'outperform' rating for CCL at a 15x multiple of its estimate for a 98-cent per share profit in 2024. 

Carnival shares opened at $14.63 on Friday.