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Carnival a sector loser for Berenberg over prolonged coronavirus hit

The cruises company is expected to see a 26% and 12% hit to annual earnings per share in 2020 and 2021 respectively

Carnival Corporation - Carnival sector loser for Berenberg over prolonged coronavirus hit

Carnival PLC (LON:CCL) (NYSE:CCL) remains a ‘sell’ for Berenberg as it thinks the coronavirus hit to the cruise sector will reverberate until 2021.

The German bank's analysts also kept their 'hold' recommendation unchanged for Royal Caribbean Cruises Ltd (NYSE:RCL) but maintained Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) as a ‘buy’ highlighting its limited exposure to Asia.

READ: Carnival says coronavirus to have a “material impact” on results

According to the bank, the pandemic is affecting the cruise industry in two ways - the initial damage of cancellations and compensations, followed by a drop in future bookings.

FTSE 100-listed Carnival, owner of the Diamond Princess ship quarantined offshore Japan, said last week that a suspension of all Asian operations to the end of April would hit its 2020 results by US$0.55 to US$0.65 per share, including guest compensation.

In the year to 30 November, earnings per share (EPS) came in at US$4.34.

But looking at future bookings, the Berenberg analysts said the cruise companies may need to offer a US$50 discount per passenger to keep ships busy.

For Carnival, the total cut to full-year EPS would be 26% and 12% in 2020 and 2021, respectively, they added.

Royal Caribbean would get a 19% and 7% hit respectively, while Norwegian Cruise Line would be the best sector performer dropping by 11% and 6% respectively, the analysts added.

Shares in Carnival in London were flat at 3,071.74p on Wednesday morning.

Quick facts: Carnival PLC

Price: 981.6 GBX

Market: LSE
Market Cap: £6.71 billion

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