RSS Galvan Chartbreaker - CARNIVAL TIME (2,484p)
By Ed Woolfitt | 06 April 2011, 13:21 BST
Ed Woolfitt, Head of Trading at Galvan
At the end of March cruise operator Carnival said that increased fuel costs for the current financial year will put a 45 cent hole in the earnings per share number. Against this, exchange rates have moved in the company's favour since it issued earnings guidance in December and it now expects currency fluctuations will offset the higher fuel costs to the tune of around nine cents per share.
Net cruise costs excluding fuel per available lower berth day for fiscal 2011 are expected to be flat or marginally higher compared to the prior year, with EPS for the current financial year expected at between $2.55 and $2.65 on a fully diluted basis, down from its December guidance of $2.90 to $3.10.
Exchange rate benefits have largely offset rising fuel costs for cruise operator Carnival, and along with the relative stability in demand for cruise holidays, the stock is looking increasingly attractive near the bottom of the 2011 trading range. Accordingly, Galvan Research rate the shares as a buy.
The Carnival chart shows that the shares have formed an extended one month base above the 2,400p level. While the 2,428p intraday low of March is held, the upside for the shares should be towards the key 200-day moving average now at 2,579p.
| Dream Scenario | Rising fuel costs and exchange rate benefits cancel each other out. | Stock | Carnival |
| Nightmare Scenario | Investors are concerned that consumers will cut back on holidays as inflationary pressures start to bite. | Epic Code | CCL |
| Price Target | 2,579p | Year High | 3,153p |
| Stop Loss | 2,428p | Year Low | 2,037p |
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Source: Galvan Research and Trading
