Carnival Corp CCL shares fell Friday in the wake of the cruise line's second-quarter report.
Wedbush analyst James Hardiman maintained a Neutral rating on Carnival and lowered the price target from $54 to $50.
“Given the underperformance of Carnival shares since the company’s 4Q report, we have wanted to get more constructive on the name, and yet the company’s outsized exposure to continental European passengers and the resulting disappointing yield guidance makes the Carnival 2019 story a tricky one," the analyst said.
Wedbush's lower price target represents modest upside from current trading levels, but not as much upside as Royal Caribbean Cruises Ltd RCL or Norwegian Cruise Line Holdings Ltd NCLH, Hardiman said.
“The yield growth guidance coming out of 4Q18 represents a disappointment at the time, with hopes that management was being exceedingly conservative. The unchanged yield guidance following 1Q and this 100 basis reduction adds insult to injury, underscoring just how serious the European issue appears to be for CCL."
The removal of Cuba as a cruise destination represents a 4-6-cent hit to earnings numbers, and the disruption of Carnival Vista represents an 8-10-cent impact, according to Wedbush. On the positive side, the firm said fuel and currency rates are adding 10 cents to EPS.
Carnival shares were down 4.25% at $46.74 at the time of publication Friday.
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