STOCKS NEWS EUROPE-Carnival continues slide on broker downgrades

Carnival (LSE: CCL.L - news) slumps 5.8 percent, the top FTSE 100 (FTSE: ^FTSE - news) faller for the second day running, as brokers cut their ratings on the stock after an update where it warned about a possible loss for the current quarter and posted a 30 percent fall in its third-quarter profit.

The stock is now down 10.9 percent since its results on Tuesday.

Morgan Stanley (Xetra: 885836 - news) cuts the cruise firm to "underweight" from "equal weight", Natixis (Paris: FR0000120685 - news) drops its rating to "reduce" from "neutral", while UBS (Berlin: UBRA.BE - news) and Exane BNP Paribas both cut their target price on the stock - the latter by 9 percent.

The brokers share concerns over the company's outlook following its poor recent trade, which suggests that results for the next financial year will be below previous estimates.

"CCL's early F14 guidance implies a sluggish yield recovery and a step-up in costs, and we think consensus will drift to our level," analysts at Morgan Stanley say in a note. "A major restructuring and/or cash return look unlikely as supports to the stock."

Morgan Stanley cites Carnival's demanding valuation as supporting the case for a downgrade. Carnival trades at a forward 12 month price/earnings per share ratio of 17.9 times, which represents a premium to TUI Travel (LSE: TT.L - news) at 11.0, Compass Group (Other OTC: CMPGF - news) and Thomas Cook (Xetra: A0MR3W - news) , at 16.5 and 13.8 respectively.

Reuters messaging rm://alistair.smout.thomsonreuters.com@reuters.net