Nomura Securities on Leisure: Cruise Line Sector Update: Expect CCL’s 2Q Call to Highlight Improving Demand

June 20, 2012 8:27 AM EDT Send to a Friend
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Nomura Securities on Leisure: Cruise Line Sector Update: Expect CCL’s 2Q Call to
Highlight Improving Demand

Analyst, Harry C. Curtis, said, "Using $600 bunker fuel and F/X to 2013E, Carnival's (NYSE: CCL) EPS could be $3.00 (Street $2.41) and Royal Caribbean's (NYSE: RCL) $3.62. Combined with yield growth, CCL shares could reach $45 (+25% potential upside) and RCL at $43 (+65% potential upside). We believe CCL’s 2Q results on Friday will be another positive catalyst, as commentary on recent bookings may be incrementally positive. We expect improvement in pricing trends in 2013; 3-5% pricing gains in the Caribbean and for 2-3% growth in Europe. Sentiment remains low as CCL trades at 14.8x F13E vs a long-term fwd multiple of 16x; and RCL trades at 8.5x F13E vs a long-term fwd multiple of 14x."

Curtis also mentioned that 2013 pricing trends are below 2008 in all regions expect Alaska. However, he sees 3-5% pricing gains in the Caribbean and 2-3% in Europe by 2013. All in, Curtis said investor sentiment remains low and shares of both CCL and RCL are trading at a discount to their respective long-term forward multiples.


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