Carnival PLC (LON:CCL) was one of the few early risers today after the London arm of an influential American bank upgraded the cruise lines operator's stock.
Morgan Stanley moved its recommendation to ‘equal-weight’ from ‘underweight’, while pushing its valuation 400p a share higher to 5,100p. At 9.45am, Carnival’s equity was changing hands for 4,919p for a rise of 29p on last night’s close.
READ: Carnival Corp reports first quarter earnings decline but raises full year guidance
Analyst Jamie Rollo said a qualitative survey of US travel agents said November, a traditionally slow month, saw bookings increase at a “rapid pace”.
The Caribbean region returned to normal after the hurricanes and demand for Europe and Alaska continued to remain robust, Rollo said in a note to clients.
He tempered this by saying the quantitative web research was less convincing, showing mixed results.
The Morgan Stanley number cruncher also said he is worried about overcapacity.
He pointed out the cruise industry order book has risen to a record 235,000 berths. So, to maintain a 2-3% yield growth, demand would need to expand 8-9% annually, which Rollo said, “seems optimistic”.