Broker snap: Morgan Stanley downgrades Carnival after cruise disaster

16th Jan 2012 13:50

Morgan Stanley has decided to downgrade cruise line operator Carnival in reaction to the grounding of the Costa Concordia over the weekend. The US broker cut its rating on the stock to neutral, from overweight, and reduced its price target to 1,800p, from 2,700p.Carnival announced that the cost of not having the boat in service will be between $85m and $95m. According to Morgan Stanley, "It could be materially worse if the investigation finds industry safety standards need improving or if consumers stay away for a prolonged period."Meanwhile, analysts at Shore Capital have reiterated their hold recommendation on the stock, saying that if shares decline below the company's book value of around 2,000p then that could represent a buying opportunity.Credit Suisse for its part has kept its neutral rating on the stock, saying that the company 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". Shares took a tumble on Monday, trading down 17.08% at 1,864p by 14:03.MJJ/BC