Analyst Offers Intel on Carnival Corp. Earnings

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After Carnival Corp.'s first quarter 2009 earnings report was released this week, financial analyst Robin Farley of UBS Warburg put out a note to investors with several interesting gleanings.

She noted that European passenger bookings are holding up better than North American bookings in terms of volume and price declines, which should benefit Carnival Corp. overall. New capacity additions are aimed at European source markets including two Costa ships and one Aida ship.

One interesting tidbit is that Farley reported "the more value oriented Caribbean trade is outperforming the premium Alaska and European itineraries, with Caribbean pricing down 10-15 percent versus 30-40 percent declines in Alaska and European itineraries." Therefore, she believes Carnival Corp. can expect to see its heaviest yield declines versus the prior year in the third quarter -- when both Alaska and European itineraries are strong.

She also said that the weakness in Alaska, in particular, will lead Carnival Corp. brands to shift some capacity to other markets in 2010. Farley reaffirmed her firm's "buy" rating on Carnival stock. " We believe Carnival Corp. is strongly positioned in the current environment given its balance sheet, operational efficiency, brand positioning, and other advantages," said Farley. "Hence we favor Carnival over Royal Caribbean."

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