The damaged caused by Hurricane Irma will have significant negative ramifications for the cruise line industry, according to one Wall Street firm.
Credit Suisse lowered its rating for Carnival shares to neutral from outperform, saying the cruise company is facing a more difficult demand environment.
Since Carnival reported earnings in June "there have been three external events that we believe add risks to the near term investment case," analyst Tim Ramskill wrote in a note to clients Friday.
Those events are the geopolitical tensions in the Korean peninsula, the August terror attack in Barcelona, and Hurricane Irma, "which has caused significant damage across the Eastern Caribbean," he said.
The cruise industry's "capacity growth [is] a greater concern given demand risks" from these events, he added.
The analyst reduced the firm's price target for Carnival shares to $70, which is 2 percent higher than Thursday's closing price. His previous target was $78.
Ramskill said the Caribbean region represented 39 percent of Carnival's passenger capacity.
He also noted cruise industry capacity will increase 6 percent a year through 2022.
"Industry supply growth is significant," he said. Cruise lines are making room for more passengers as they come up against these demand challenges in the top three cruise markets: the Caribbean, Mediterranean and China. "We assume more cautious 2018E yield [passenger sales versus available capacity] growth," he wrote.
Carnival did not immediately respond to a request for comment. Its shares have outperformed the market this year. The stock has risen 32 percent year to date, while the S&P 500 is up 11.5 percent through Thursday.
The company's shares opened down 2 percent on Friday after the report.
— CNBC's Michael Bloom contributed to this story.