Enter multiple symbols separated by commas

Carnival Drops on Merrill Downgrade

Shares of cruise operator Carnival declined in Friday trading when a Merrill Lynch analyst downgraded the stock, cautious on pricing weakness in the Caribbean this winter and into next summer.

Analyst David W. Anders, who downgraded the stock to "Neutral" from "Buy," said Caribbean ticket prices range from unchanged to a 15% decline, relative to last year's levels, across Carnival Cruise Lines, Royal Caribbean International and Princess.

"Although observed pricing in November and December for summer sailings is typically not critical, it does indicate the company will be entering the wave season at much lower prices than we had anticipated," Anders wrote. The wave season is an important period of heavy bookings that runs from January through March.

"This year, considering that prices in the Caribbean are generally below last year's levels by as much as 15 percent in some low-end trades, even if we see some price increases during the wave season, the average selling price in the Caribbean is unlikely to be higher than 2006," Anders wrote.

But Anders expected some of the weakness in the Caribbean to be offset by higher ticket prices on non-Caribbean itineraries.

"Our preliminary research indicated year-over-year pricing gains in premium markets, such as Alaska and Europe," Anders wrote in a client note.

Ticket prices in Alaska are running 1% to 7% higher on a year-over-year basis, and ticket prices in Europe are flat to up 1 percent -- also compared to a year ago.

Anders kept a "Buy" rating on Royal Caribbean Cruises , expecting the stock to outperform on increased fleet allocation to Europe and an additional Freedom-class vessel. In May, Royal Caribbean launched The Freedom of the Seas, the world's largest cruise ship.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Dani Mathers, the 2015 Playmate of the Year, poses during a luncheon on the garden grounds of the Playboy Mansion in Los Angeles, May 14, 2015.

    Playboy on Thursday launched its completely safe-for-work mobile app Playboy NOW, part of a strategy to make more mainstream content.

  • Li Hejun, Hanergy Holding Group

    In the history of sudden wealth loss, Li Hejun may have set a new record.

  • Marc Cuban

    Ask Mark Cuban what the next big thing in technology is, you'll get an answer straight out of a science fiction film.

U.S. Video

  • IBM takes aim at traffic nightmares

    Bob Picciano, IBM svp of analytics, discusses how IBM's smart traffic management system is using hi-tech to tackle traffic jams in New Jersey.

  • Cutting your water bill

    CNBC consumer reporter Kelli Grant offers tips on how to stop wasting water and cut down your water bill.

  • Doing the math on minimum wage

    Joe Watkins, former GHW Bush White House official, and Jimmy Williams, Blue Nation Review, weigh in on the minimum wage debate and whether it hurts small business.