Broker tips: Carnival, Barclays, BP

Analysts at Berenberg lifted their earnings per share estimates for cruise line operator Carnival, citing a still "strong" booking environment for the cruise industry, adding that the current discount on the shares' valuation, versus that of the S&P 500, looked "harsh".

On top of the booking environment, the German broker cited the company's better-than-expected first quarter 2018 numbers and additional tailwinds from foreign exchange and fuel, resulting in their decision to mark-up their 2018 EPS estimates for the company by 6%.

The broker also lifted its US dollar-based target price from $70.0 to $71.5, and reiterated its recommendation to 'hold'.

However, Berenberg's Sterling-based target was lowered from 5300p to 5050p as a result of recent pound strength.

"Strong" consumer confidence across Carnival's markets were also expected to underpin on-board spend and the broker's upwardly revised forecasts for the company's yields.

Analysts at JP Morgan stuck by their recommendation to 'overweight' on shares of Barclays after the lender announced that it had reached a settlement with the US Department of Justice.

In their opinion, the £1.4bn ($2bn) deal - which was at the low end of market expectations - marked a watershed moment in the lender's recovery story, likely heralding a shift towards increased capital returns.

Hence, the shares' risk-reward profile was still positive, they said, with Barclays's Tier-1 equity capital buffers also seen climbing from 13% at present to 14.5% by the end of 2020.

The settlement with the DoJ would likely also result in a "material" improvement in the group's PRA stress test performance.

Nonetheless, JP Morgan was not expecting any announcement on share buybacks until after the 2018 stress test results, which were expected in the last quarter of the year.

JP Morgan left its estimates for Barclays's total litigation costs over 2018 to 2020 at £2.5bn, but with the bulk of those, to the tune of £1.5bn, now expected to be incurred this year and kept its forecasts for earnings and dividens per share untouched, with the target price still at 250p.

"In terms of read-across, we believe that the cash settlement of $2bn may be seen as a helpful read across for RBS, but the lack of customer relief leaves some uncertainty remaining for RBS."

Elsewhere, Barclays reiterated its endorsement of BP's shares as its 'top-pick' in the sector, noting how the sector had only performed 'in-line' with the wider market since the beginning of 2018, even as analysts had bumped up their profit estimates by 10%.

That, they said, appeared to them to be "inconsistent", leading them to reaffirm their 'positive' stance on the sector and their 'top-pick' stance on BP specifically with a target price of 675p.

Separately, Shell was kept at 'overweight' with a target price of 3,000p.

The broker also noted how European Intergrated Oils tended to always miss analysts' consensus forecasts in the fourth quarter, only to beat them "strongly" in the first quarter.

"Following a weaker than expected set of 4Q results, we forecast 1Q earnings up 14% q/q, helped by the combination of a seasonally lower cost base, a higher oil price and better contribution from trading."

Barclays also said that refining margins at four-year lows would in many cases probably be offset by better petrochemical margins.