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Funds raised, CCL and RCL can go 12 months in no-revenue scenario: Wm. Blair

CRUISE William Blair logo.jpeg
After recent equity raises, Carnival Corp. and Royal Caribbean Group have enough liquidity to weather up to 12 more months in an essentially zero-revenue scenario, William Blair said in a note.

Royal Caribbean Group priced 16.9m shares at $91/share today, while Carnival priced 40.5m shares at $25.10/share on Feb. 22.

William Blair also adjusted its earnings estimates for the two companies, assuming de minimis sailings before June followed by a gradual ramp-up through the rest of the calendar year.

New EPS estimates

The brokerage now projects a loss of $13.25 per share for Royal Caribbean Group in 2021, followed by a profit of $1.07/share in 2022. New estimates for Carnival are a loss of $4.95/share in 2021, then a profit of 93 cents/share in 2022.

'... We continue to view both Royal’s and Carnival’s stocks as already pricing in a recovery at valuations of roughly 30 times and 18 times post-pandemic earnings power, respectively, roughly $3 for Royal Caribbean and $1.25 for Carnival assuming 2019 revenue and margins alongside the dilutive impact of debt and equity issued to ensure the companies’ viability,' William Blair analyst Sharon Zackfia said.

The brokerage reiterated its 'market perform' (hold) rating for both stocks.

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