Carnival on cruise control into 2015, says Credit Suisse
Credit Suisse has reiterated its ‘outperform’ recommendation on cruise operator Carnival Corporation, saying that it is “maintain[ing a] positive view into 2015”.
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Carnival on Friday reported adjusted earnings per share of 27 cents for the fourth quarter ended 30 November, compared with just four cents the previous year, guidance of 15-19 cents and Credit Suisse’s forecast of 20 cents. Net yields improved by 2.8%, ahead of the +1.5-2.5% guidance and the bank’s +2.1% estimate.
Looking ahead, Carnival said that yields for the fiscal year ending November 2015 would rise by 2%.
“While net yield guidance was somewhat tempered, we are pleased with the direction CCL is heading and see guidance reflecting global macro uncertainty, and a business still in the midst of a turnaround,” Credit Suisse explained.
“With that said, we see room for upward revisions as the year unfolds, with the potential for significant upside to current estimates in 2016.”
The bank also said that Carnival should be a “significant beneficiary” of lower fuel prices and improvements to energy efficiency. Lower petrol costs for consumers should also improve ticket prices and onboard spend, it said.
Credit Suisse concluded: “We continue to see CCL shares as attractively valued particularly versus longer-term earnings power in a normalized environment. Given that lodging valuations are fuller and Macau gaming trends remaining troubling, we think cruise stocks may benefit from further investor rotation.”
The bank has a 2,807p target price for Carnival’s UK shares, which were trading 0.3% higher at 2,818p by 11:19.