Numis upgrades Carnival on improving outlook for cruise operators

LONDON (ShareCast) - Numis Securities has raised its stance on Carnival Corporation (NYSE: CCL - news) from 'hold' to 'add' and its target price from 2,950p to 3,600p, saying the outlook is improving for the cruise industry. "Royal Caribbean and Norwegian Cruise Lines have both highlighted the improving yield environment in recent months and all of the major players are committed to prudent, measured capacity growth and to improving returns," Numis said.

The broker said that Carnvial's first-quarter results last week "provided clear evidence of improving industry fundamentals, we believe, demonstrating strong like-for-like (constant currency) net revenue yield (NRY) growth".

NRY rose 2% year-on-year in the first quarter ended 28 February, better than guidance of +0-1% and ahead of consensus estimates. Earnings per share came to $0.20, compared with $0.00 the year before and the $0.07-0.11 guidance.

While weakness in major currencies versus the dollar was a negative for full-year guidance, Numis said that this has been largely offset by an improved NRY performance, leaving full-year guidance overall unchanged.

"Management is developing a track record of under-promising and over-delivering," the broker said.

Carnival (LSE: CCL.L - news) 's shares, which had jumped from 3,024p to 3,241p on Friday, were up a further 0.7% at 3,265p on Monday morning.