Broker snap: Numis upgrades Carnival to 'buy'

28th Jan 2014 10:19

Carnival's share price received a boost on Tuesday from analysts at Numis Securities who raised their recommendation on the cruise operator's stock from 'hold' to 'buy' on the back of positive read-across from sector peer Royal Caribbean.Royal Caribbean beat earnings forecasts with its 2013 results on Monday, while guidance for net yields at the start of 2014 was positive. They were expected to be up by between 2-3% in constant currency terms.The company's Chairman and Chief Executive Richard Fain said that it had reached an "inflection point" and said that demand outside the weak-yield market of the Caribbean was strong.Numis said: "We believe that the read-across to Carnival is positive and we have increased our FY14E earnings per share forecast by 13% ($1.75 to $1.97), our target price from 2,250 to 3,000p and we have upgraded to 'buy'."While Carnival said last month that yields for the full year ending November 2014 would be "slightly" lower than the previous year, Numis believes that guidance may be upgraded when it reports first-quarter numbers in March."First, Carnival has greater yield recovery potential than Royal Caribbean after the 2013 incidents on Carnival vessels Dream and Triumph. Second, Carnival's geographic exposure is much more favourable that Royal Caribbean's given current trading trends."The stock was 3% higher at 2,553p by 10:18 on Tuesday.BC