Carnival Corporation yesterday downplayed investor concerns about weakness in European markets to financial analysts. The concerns apparently were the result of an announcement earlier this week from Thomas Cook, commenting on weakness in the UK and French markets and the lasting impact of MENA (the Middle East, North Africa situation). Analysts Robin Farley at UBS Investment Research and Tim Conder at Wells Fargo Securities maintained their positive evaluations and “Buy” recommendations for Carnival and Royal Caribbean Cruises.
In the cruise companies’ favor, they are diversified, sourcing passengers and deploying ships not only in Europe, but more significantly in North America, as well as in South America, Australia and in the Asia/Pacific region. However, the brands have a huge exposure in Europe, especially in the all important third quarter, and how the MENA situation will play out – with issues far from being resolved in Egypt, for example, combined with struggling economies and austerity measures in several European countries, remain to be seen. For now, the third quarter of this year is under control, the question is more about the winter season and next year.