Broker snap: Costa tragedy to affect bookings at Carnival, says Credit Suisse

16th Jan 2012 09:54

Shares in cruise ship operator Carnival dropped nearly 19% on Monday morning following the news that one of its luxury liners grounded off the coast of Italy at the weekend.The Costa Concordia hit rocks off the island of Giglio on Friday evening, causing the deaths (so far) of six people as well as numerous injuries. Sixteen passengers are still missing, according to news reports.Credit Suisse says the incident will be a "black mark on the cruise industry" as well as a negative headline for Carnival. The firm, which is the parent company of Costa Cruises, said that the cost of not having the boat in service will be between $85m and $95m."While these accidents are extremely rare, the extensive media coverage will likely curtail some booking activity and pressure pricing during the critical wave season," Credit Suisse said.Nevertheless, the broker says that while investors may want to avoid the stock in the near-term, it is still positioned for the long-term. The "near-3% dividend yield and history of returning capital through buybacks should provide a backstop for the stock".Credit Suisse maintained its 2,285p target price. By 09:58, Carnival's shares were down 18.55% at 1,831p.BC