Nomura Securities on Cruise Line Sector - RCL Being Dragged Down but Shares Attractive: Tough to Defend CCL, But Market Cap Loss Seems Excessive
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Price: $287.62 -4.31%
Rating Summary:
24 Buy, 14 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
24 Buy, 14 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Nomura Securities on Cruise Line Sector - RCL Being Dragged Down but Shares Attractive: Tough to Defend CCL, but $4b Market Cap Loss Seems
Excessive
Nomura analyst, Harry Curtis, said, "Royal Carribean (NYSE: RCL) sold off ~ 8% in Oslo yesterday compared with broader market performance of up 0.3%. We believe that the Costa wreckage is Carnival (NYSE: CCL) specific and that RCL’s stock is under-valued. RCL sources fewer passengers from Europe and its supply is more limited, so Costa’s tarnished public image could lead to share gains by RCL, particularly Pullmantur (Spain), Croisières de France (France), and its 50% JV with TUI cruises (Germany)."
"With less euro exposure than CCL, RCL also has less earnings risk should the euro sink to $1.20 from $1.27 as Nomura’s ForEx team expects. At $1.20, RCL still has positive current dollar yield growth in 2012. We expect positive constant dollar yield at RCL of +2.5%."
CCL Will Suffer More in the Media, but Shares Appear Attractive After
Yesterday’s 16.5% Sell-Off in London
"CCL’s stock lost ~ $4b of its market value yesterday, which could be oversold. We estimate its long-term earnings power has declined ~ 5% as a result of the tragedy vs. a 16.5% decline in market cap."
"It may take years to repair the brand damage that Costa has sustained, and we expect higher costs for crew training, not to mention the uncertainty CCL will suffer in the near term over insurance coverage, as well as its inadequate response to this tragedy."
Excessive
Nomura analyst, Harry Curtis, said, "Royal Carribean (NYSE: RCL) sold off ~ 8% in Oslo yesterday compared with broader market performance of up 0.3%. We believe that the Costa wreckage is Carnival (NYSE: CCL) specific and that RCL’s stock is under-valued. RCL sources fewer passengers from Europe and its supply is more limited, so Costa’s tarnished public image could lead to share gains by RCL, particularly Pullmantur (Spain), Croisières de France (France), and its 50% JV with TUI cruises (Germany)."
"With less euro exposure than CCL, RCL also has less earnings risk should the euro sink to $1.20 from $1.27 as Nomura’s ForEx team expects. At $1.20, RCL still has positive current dollar yield growth in 2012. We expect positive constant dollar yield at RCL of +2.5%."
CCL Will Suffer More in the Media, but Shares Appear Attractive After
Yesterday’s 16.5% Sell-Off in London
"CCL’s stock lost ~ $4b of its market value yesterday, which could be oversold. We estimate its long-term earnings power has declined ~ 5% as a result of the tragedy vs. a 16.5% decline in market cap."
"It may take years to repair the brand damage that Costa has sustained, and we expect higher costs for crew training, not to mention the uncertainty CCL will suffer in the near term over insurance coverage, as well as its inadequate response to this tragedy."
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