Broker snap: Carnival still a buy despite uncertainty

14th Mar 2011 10:19

Although Nomura has reduced its target price for Carnival - after the cruise operator lowered its guidance as a result of rising fuel costs - the broker stays with a 'buy' rating.The first quarter results came in at the top end of the guidance range, but the group downgraded its full year earnings per share (EPS) guidance midpoint by $0.45 (15%), largely due to the rise in oil prices. The group also attributed the impact of the Middle East and North Africa situation on bookings and itineraries as a small reason for the reduction."Having marked to market ourselves three weeks ago, the impact on our forecasts is 7% (lower than the 15% guidance change)," says analyst Nicholas Thomas. Nomura also adjusts estimated 2011 net yield to +3.7%, from +4.5%."Uncertainties on [fuel costs and geopolitical unrest] could persist near term. However, our core thesis for a period of above-trend yield growth, driven by cyclical recovery and a better supply/demand balance, is unchanged," says Thomas.The target price is reduced from 3.450p to 3.250p, but a positive stance is maintained.