Carnival Corporation (NYSE: CCL) is the world's largest recreational cruise ship company.
Analysts expect adequate revenue gains for CCL in 2008, primarily on increased capacity. Larger booking increases are expected in Europe, as opposed to North America, which may begin to show the effects of the U.S. economic slowdown. As of first quarter 2008, Carnival had 85 ships with a passenger capacity of 158,000.
Meanwhile, cruise prices should rise modestly, and a likely fuel surcharge will ease the impact of higher fuel costs. Further, analysts also like CCL's rising demand for Caribbean cruises, along with the company's leading market share in leisure cruises. The Reuters FY 2008/FY 2009 EPS consensus estimates for CCL are $3.09 to $3.40.
The risks? Analysts are keeping an eye on Carnival's advanced bookings for signs of further effects from the U.S. economic slowdown. A sustained drop would lead to cruise price discounting -- typically a sign of softer revenue results ahead.
The First Call mean rating for CCL is: Buy [19 firms]. Mean 2008 target: $52 [high: $60, low: $46].
Stock Analysis: Carnival Corp. is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from CCL's shares. Sell/Stop Loss if you were to purchase shares in this company: $27.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
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Reader Comments (Page 1 of 1)
3-25-2008 @ 8:49AM
harry said...
a cruise is the only way to go....not a big fan of carnival though. there is a big difference between carvival and royal caribbean. royal cost is only a little more but twice the cruise......