Historically, the company has used its annual report to give an update on wave-season bookings since Carnival's guidance in December doesn't have the future-year visibility that companies with a December fiscal year do, UBS said in a note.
One of those companies, Royal Caribbean, last Thursday projected its net yields to rise 4% to 6%, however UBS analyst Robin Farley said that includes significant accounting benefit from the deconsolidation of Pullmantur. Excluding the 125 basis points related to Pullmantur indicates 3.75% yield guidance at the midpoint for RCL, Farley said.
Furthermore, UBS cited the benefit to RCL of a full year of two new ships, Ovation of the Seas and Harmony of the Seas, and the sale of Legend of the Seas—changes Farley said add about 125 to 130 basis points to 2017 yield.
As a result, UBS put the like-for-like estimate of RCL yield as up 2.5%—the same as Carnival.
Carnival estimates 2017 adjusted earnings per share of $3.30 to $3.60, and in its 10-K reiterated December fuel cost and foreign exchange assumptions, while pointing out those change daily.
UBS estimates fuel and FX since the Dec. 20 guidance may have had a net positive impact of 4 cents to a nickel per share since the dollar has weakened against major currencies, partially offset by slightly higher fuel costs.
The brokerage continues to be slightly ahead of CCL's guidance, and Farley said RCL's outlook from Thursday is 'a positive indication, in our view, that there is likely upside to CCL guidance.'
UBS reiterated its distribution channel checks indicate a strong start to wave season.
The brokerage rates both CCL and RCL 'buy.'
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