Broker snap: Too early for Carnival to raise guidance, says Numis

12th Dec 2013 09:21

Numis Securities has kept its 'hold' rating and 2,250p target price for cruise operator Carnival ahead of its annual results next week, saying it may be too early for the firm to increase guidance.Carnival reports its full-year results on Friday December 20th and is expected to report sales of $15.47bn, up from $15.38bn the year before, according to Numis. Profit before tax, however, is forecast to slip to $1.21bn, from $1.30bn previously."The fourth quarter for Carnival is relatively small and seasonally weak and we do not expect any surprises as far as fiscal year 2013 is concerned. Of greater significance in determining the direction of the share price, we believe, will be the outlook statement," the broker said.Company guidance is for net revenue yields (cruise revenues minus costs) on a constant currency basis to be down around 3% in the year just gone.Looking ahead, Numis expects net yields to rise by 2.5% in the year ending November 2014, which assumes a material second-half recovery after an estimated decline of 3-4% during the first half.The broker said there is "very significant scope" for net yields to rise over the medium term, with current yields at more than 10% below their 2008 peak."Carnival, as do we, expect an increase in yields in the second half of 2014, this reflects an expectation of some improvement in Europe (including continued recovery at Costa) in combination with the pay-back from the substantial increase in marketing activity undertaken since the Autumn. "However, we suspect that it may refrain from increasing guidance ahead of the peak 'wave' booking season in the first quarter of the calendar year."Numis said that while it has been encouraged by some of the initiatives undertaken by newly appointed Chief Executive Arnold Donald, the results next week "have probably arrived too soon for him to adopt a more optimistic tone with regards to the outlook".The stock was down 1.31% at 2,116p by 09:54 on Thursday.BC