Carnival's Q2 profit a year ago was 9 cents per share.
William Blair analyst Sharon Zackfia projects a 3% constant-currency decline in net yield, at the better end of Carnival's guidance of down 3% to 4%, as positive yields in European brands are more than offset by negative yields for North American brands.
'The company faces tougher comparisons for its Carnival brand in the second quarter as bookings for the period were mostly complete before voyage disruptions last year that resulted in negative publicity,' Zackfia said in a note.
William Blair expects net cruise costs excluding fuel will rise 2.5% to 3% on a constant-currency basis, at the lower end of guidance for a 2.5% to 3.5% increase and a modest deceleration from the first quarter's 3.3% increase.
Pricing research suggests improving trends for Carnival Cruise Lines through May, although Costa pricing remains somewhat volatile, with strong increases in April and May followed by a weak start to June, Zackfia said. Across all brands, William Blair detected the strongest pricing in the Mediterranean, followed by Alaska, where pricing rebounded in May after softening in March and April.
As expected, Caribbean pricing is weakest, however Zackfia said trends seem to have improved after the Carnival brand lapped the Carnival Triumph incident.
The brokerage projects Q3 earnings per share at $1.53 compared to the $1.51 consensus and $1.38 in 2013.
'We expect net yields to inflect into positive territory, including positive results in North American brands, given the lapping of pre-Triumph bookings last year and increased marketing efforts, and project an approximate 2% constant-currency net yield increase,' Zackfia said. William Blair also expects constant-currency net cruise costs, excluding fuel, to continue to moderate sequentially, with an approximate 1% increase.
The brokerage thinks Carnival management will reiterate or narrow its previous guidance range of $1.50 to $1.70, encompassing William Blair's $1.60 estimate, a 1% increase and compared to the $1.72 consensus projection. In 2013, EPS was $1.58.
Zackfia continues to forecast a full-year constant-currency net yield decline of 0.5% to 1%. The company's guidance is for a slight decline.
'Carnival's stock has remained essentially flat so far in 2014 and is trading at 25 times our calendar 2014 EPS estimate. At the current valuation, we believe a strong recovery is built into expectations for 2015, for which we continue to see scant evidence as of yet,' Zackfia told investors.
William Blair rates CCL 'market perform' (hold). Shares closed at $38.42 on Monday, down 50 cents.