Is Carnival (CCL -1.44%) (CUK -1.65%) stock’s run finally over? The cruise industry leader has made an incredible comeback after falling off a cliff when the pandemic started. It’s back to business and its usual, sales-generating self, with sky-high demand and record operating profits.

The stock price has matched its ascent, and Carnival stock is up 270% over the past three years. It has required a good amount of confidence from investors to stay with it over this time, but it’s paid off. However, after the most recent earnings results, the stock has started to drop again. Is this a buying opportunity? Wall Street analysts say yes. Are they right?

Image source: Carnival.

Endless seas, endless demand

Carnival is the largest cruise operator in the world, with 90 ships across its portfolio of brands, which includes Princess, Holland, Aida, and others. Demand is outstripping capacity, and it’s ordering more ships to handle all of the people who want to take a historic trip on a luxury liner.

It’s also working hard to generate that demand, with many new features and destinations to attract new and repeat business. In July, it opened Celebration Key, a Caribbean asset that’s exclusive to Carnival travelers. It’s keeping busy there, and management expects it to have visitors nearly every day this year, with two ships in port 85% of the time. It’s getting ready to launch or expand several other exclusive Caribbean assets.

Management is moving ships to where demand is highest, and it already has plans in the works to increase capacity in these locations for the 2027 and 2028 sailing seasons. It’s opened up bookings for new options in South Florida and Texas, and it’s opening new home ports in Norfolk, Virginia and Baltimore, Maryland. It also announced its first-ever dedicated Hawaii series sailing from California.

There’s incredible momentum at Carnival. Almost half of 2026 is already on the books, and in the U.S. and Europe, ticket prices are at historic highs. Occupancy trends remain at historical highs as well.

Are new problems emerging?

For all intensive purposes, Carnival’s fiscal third-quarter (ended Aug. 31) earnings were phenomenal. It beat guidance across metrics, and it reported its highest-ever quarterly adjusted net income at $2 billion. It raised full-year guidance across metrics as well, and this was the third time this year that it did so.

Other positive news is that as interest rates go down, it’s paying off its high debt and refinancing at better rates, saving millions in interest expense.

Despite the wins in basically every area, Carnival tumbled after the report, and it’s still falling, down 7% since the results were released.

It could be tied to the remaining debt of $26.5 billion or to the slowing down of some year-over-year increases. Revenue, for example, increased only 4% from last year. The market may also not have liked Carnival’s plan to convert some of its debt into stock, which dilutes the current outstanding shares. Another likely explanation is that crude oil prices rose on the day of the report, and all of the major cruise stocks fell.

Go with Wall Street

Wall Street sees this opportunity and says go for it. Of covering analysts, 73% call it a buy, with an average price target of 27% over the next 12 to 18 months and a high of 50%.

Investors should always take Wall Street’s approach with a grain of salt and dig further. But in this case, so long as you aren’t totally risk averse and you have a long-term investing timeline, I think Wall Street is on the money here. Carnival has demonstrated strong management, resilience, and cost efficiency, and it’s investing in its future. Keep in mind that you can’t time the market, and the stock could continue to drop before getting back up again, but this looks like an opportunity to buy Carnival stock on the dip.