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Royal Caribbean Beats, Outlook Disappoints

HSBC Global Research analyst Ben O'Toole recently initiated coverage of Carnival and Royal Caribbean. He opened coverage on Carnival with an overweight rating and $51 price target. The analyst gave Royal Caribbean a neutral rating and $43 price target.

O'Toole noted that demand for cruises has been improving, especially in Europe, and that the operators are further helped by slow supply growth.

"We are also optimistic that costs can be controlled and that, as both operators increase in size, further efficiencies can be achieved, leading to margin expansion," he noted.

Carnival shares were 2.3% lower in premarket trading Thursday.

The Vanguard Consumer Discretionary (VCR) and iShares Dow Jones U.S. Consumer Services Sector Index Fund (IYC), exchange-traded funds that count Royal Caribbean and Carnival among their holdings, both traded up, gaining 0.9% and 0.6%, respectively.

-- Written by Miriam Marcus Reimer in New York.



>To contact the writer of this article, click here: Miriam Reimer.

>To follow the writer on Twitter, go to http://twitter.com/miriamsmarket.

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