Carnival (CCL) continues to benefit from strong booking trends, increasing operational efficiency, and resilient cruise demand, Tigress Financial Partners said in a Wednesday note.

The firm pointed to the company's fleet expansion, geographic diversification, and efforts to attract younger demographics as key growth drivers. It also noted that private destinations, including the upcoming Celebration Key in Grand Bahama, are becoming increasingly important for revenue and itinerary planning.

The firm noted that Carnival's revenue and cash flow growth should continue to support fleet upgrades, expansion initiatives, and debt reduction.

Carnival reported Q1 revenue of $5.8 billion, up 7.4% from the prior year and a record for the company. Cumulative advanced bookings for the remainder of the year remain in line with last year's record levels, according to the note.

While the potential loss of tax-exempt status is a risk for the cruise industry, Tigress said the process of enacting tax law changes is complex and involves multiple stakeholders, making it unlikely that Carnival's tax position will change.

Carnival remains well-positioned to benefit from increasing consumer spending on travel, with the overall cruise market continuing to expand within the broader $2 trillion global travel sector, Tigress added. The company is also on track to reach its key "Sea Change 2026" targets a year early, supported by strong demand, pricing, and yields.

Tigress reiterated the company's stock at strong buy and increased the target price to $32 from $28.

Shares of Carnival were down nearly 2% in recent Wednesday trading.

Price: 20.90, Change: -0.36, Percent Change: -1.67