Barclays forecasts rough seas ahead for Carnival

Barclays has cut its recommendation for cruise operator Carnival over concerns earnings will continue to suffer from weak European demand.

Last week Carnival – which is dual-listed in New York and London – saw its share price slide after cutting its full-year profit forecasts. The company blamed Washington’s surprise decision to ban cruises going to Cuba and weakening demand in Europe. Around 19% of Carnival’s total passengers came from mainland Europe in 2018.

Taking over coverage of the UK listed stock, Barclays analyst Vicki Stern said: “While we never like to be reactive to bad news that has already affected sentiment and the stock price, Carnival’s challenges in Europe, which could continue into next year, make it difficult for us to justify a rating on par with Royal Caribbean Cruises and Norwegian Cruise Line Holdings, which face stronger growth catalysts.

“With significantly lower yield growth expectations for 2019 and potentially 2020 versus that of Royal Caribbean Cruises and Norwegian Cruise Line Holdings, we believe that Carnival will continue to underperform.”

As a consequence, Barclays has downgraded the stock to ‘equal weight’ from ‘overweight’, and reduced its price target to 4,330p.

As at 1330 BST, Carnival’s London-listed shares were off 3% at 3,390p.