Wednesday, Credit Suisse downgraded Carnival Corp. (CCL) shares to Neutral from Outperform, while increasing its price target to $37 from $34. However, the brokerage raised its 2009 EPS estimate to $2.20 from $2.12, while maintaining its 2010 estimate of $2.30.
Analyst Barry noted that with net yield recovery now widely anticipated, near-term risk/reward more balanced and sources of support for our prior resiliency thesis including modest category size, strong value prop., underpenetrated global sourcing opportunity and asset mobility appear much more widely appreciated.
The analyst said that as anticipated, volume growth remains encouraging, +19% year-over-year through first half of 2010, and curve modestly lengthening. While comps easing and impact of slack demand on book-to-fill strategy a year ago was pronounced, visibility into 2010 remains limited and curve likely to remain contracted.
The analyst added that resiliency-supportive 2009 EPS tailwind from fuel price relief of $0.76 now represents, $0.48, headwind to 2010 EPS recovery story. EPS sensitivity to 1% change in net yield is $0.14 and 10% change in fuel cost per ALBD is $0.19.
The analyst said that the company reported fiscal third quarter beat of $1.33 compared with $1.65 a year ago, guide of $1.15-$1.19 and his $1.24 on constant US dollar net yields -12.3% vs. guide -14%-16% and net cruise costs -11.4% vs. guide -9%-11%, excluding fuel -2.4% on comp basis.
The analyst's revised price target of $37 reflects move to high end of year-forward fair value range of $34-$38 owing to attractiveness of long-term story and implies 15x 2011 EPS in line with trailing three-year NTM average. With rating downgrade to Neutral, CCL has been removed from the CS European Focus List.
The analyst would re-visit on indications of a steeper 2010 yield recovery trajectory, i.e. mid-single digits in constant US dollar, barring an upward move in fuel prices or on an entry point that offers more substantial upside potential to his price target.
Currently, CCL is up $0.22 or 0.66% and trading at $33.74.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.