In a note, analysts at the broker said they believed the market was “discounting a c6-8% decline in revenue yields”, comparable to a 9% fall following the 2008 financial crisis.
READ: Carnival posts strong fourth-quarter earnings, 2019 bookings considerably ahead but prices flat
Carnival’s shares have lost around 7.4% of their value since mid-December after the FTSE 100 cruise operator reported strong fourth-quarter earnings but predicted flat yields in the first quarter of the new year.
The firm said its fourth-quarter adjusted net income rose to US$492mln, giving earnings per share (EPS) of 0.70 US cents, compared to net income of US$452mln and EPS of 0.63 US cents a year earlier, with net cruise revenues up 6.1% to US$3.7bn compared to US$3.5bn.
For full-year 2018, Carnival recorded adjusted net income of US$3.0bn or US$4.26 per share, up from US$2.8bn, or US$3.82 for full-year 2017. Revenues for full-year 2018 were US$18.9bn, US$1.4bn higher than the US$17.5bn recorded a year earlier.
However, in its outlook, the firm said cumulative advance bookings for full-year 2019 were considerably ahead of the prior year but at prices that are in line with the prior year. Therefore, first quarter constant currency net revenue yields were expected to be flat year-on-year.
“With the stock valued at just over $170k per berth, towards historic lows and sharply below replacement cost, we upgrade from Hold to Buy,” the broker said.
In late-morning trading Tuesday, Carnival shares were up 2.5% at 4,022p.