Deutsche Bank 'Taking A Break' On Carnival Ahead Of Friday's Earnings

In a report published Monday, Deutsche Bank analyst Richard Carter downgraded shares of

to Hold from Buy with a price target raised to $51 from a previous $48 ahead of the company's first quarter results on Friday. According to Carter, Carnival's first quarter will show further bookings and pricing recovery along with operational momentum in its core brand. However, the analyst added that recent moves in the euro and other currencies could result in the company's guidance being reduced by around 8 percent and consensus estimates falling 5 percent to 10 percent. Carter forecasted the company's first quarter earnings per share will improve to $0.07 from prior estimates of $0.09 due to 1.3 percent greater foreign exchange headwinds of -4.3 percent versus prior assumptions and management's guidance of only -3.0 percent. The analyst also cited a higher fuel derivative loss of $56 million versus the company's guidance of $41 million. For the full fiscal year, Carter is projecting the company will now earn $2.29 per share, versus prior estimates of $2.67. "We remain positive on Carnival as we think the medium term earnings recovery potential remains intact, however with only eight percent upside to our $51 price target we move our recommendation to HOLD," Carter concluded.