Carnival Corp rosier outlook for 2017 has helped ease concerns for the cruise market next year, an Susquehanna Financial Group analyst said Wednesday after executives painted a picture of strong booking volume and pricing.
Though many vacations for next year are still to be booked, particularly in China, company executives described patterns that showed positive signs across a broad spectrum of the market as the company reported better-than-expected fourth-quarter earnings this week.
Carnival’s bullish outlook came amid investor concerns that promotional activity by cruise lines portended some market softness, amid fuel prices that are poised to rise.
Susquehanna’s Rachael Rothman, who responded to the earnings report by lifting her estimates and stock price outlook for Carnival, said the commentary by company executives should help allay concerns about an environment of steep discounts in the Caribbean.
“In concert, they reinforced the view that 2017 would be another year of improvement, and that the strength was broad-based, both of which help de-risk the narrative,” she said.
And the Rothman said Carnival’s expectation of more than 2.5% growth in net yields next year show that cost containment initiatives are also bearing fruit.
Chief financial officer David Bernstein told analysts that the world’s largest cruiseship owner is expecting to see the yield improvements across almost all of its itineraries.
“Since September both booking volumes and prices for the first three quarters of 2017 have been running well ahead of the prior year,” he said. “At this point in time for the first three quarters of 2017, cumulative advance bookings are well ahead at considerably higher prices.”
As TradeWinds reported in its web edition, Arnold Donald-led Carnival reported $609m in profit for the final quarter of its fiscal year, a 126% jump on the same period of last year.
That translated into adjusted earnings per share of $0.67, which beats the average analyst estimate calling for $0.58.
