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Carnival Shares Surge For 2nd Day On 2Q Results

The Associated Press

NEW YORK (AP) — Carnival Corp.'s shares surged Friday for the second straight day after the cruise operator reported a better-than-expected second-quarter profit and analysts expressed a more favorable view of the stock, saying cruise booking prices have are starting to increase.

Carnival shares gained $1.53, or 6.2 percent, to $26.30 on Friday afternoon, after jumping 8 percent on Thursday. The stock has traded between $14.85 and $42.39 during the past 52 weeks.

Barclays Capital analyst Felicia Hendrix raised Carnival to an "Equal Weight" rating from an "Underweight" rating. "Our upgrade is based on our belief that cruise pricing has bottomed as evidenced by commentary on (Carnival's) earnings call yesterday," she said.

Wachovia Capital Markets analyst Timothy Conder upgraded Carnival's stock to an "Outperform" rating on the improving pricing outlook.

On Thursday, Miami-based Carnival reported that its second-quarter profit had dropped 32 percent to $264 million, or 33 cents per share, in the quarter that ended May 31. That result was better than analysts had expected, despite the negative impact of rising fuel prices and cruise route changes due to swine flu.

The company said deeply discounted cruise prices had driven a surge in bookings, despite the weak economy. As a result, Carnival said it has started to raise prices from those bargain basement levels.

The company lowered its full-year forecast, however, due to rising fuel prices that are likely to boost its expenses.

Carnival now expects 2009 earnings to range from $2 to $2.10 per share, down from the company's previous guidance range of $2.10 to $2.30. The company expects third-quarter earnings of $1.15 to $1.19 per share.

Analysts polled by Thomson Reuters predict a 2009 profit of $2.10 per share and third-quarter earnings of $1.23 per share.

"While the outlook is lower on a net basis, the internals are actually quite encouraging," said Robert LaFleur of Susquehanna Financial Group in a note to investors. "Booking volumes are accelerated and the level of discounting is beginning to ease somewhat."

LaFleur maintained a "Positive" rating on the stock and raised its price target to $31 from $26.