Costa Concordia’s wreck on Jan. 13 at the start of the wave season has caused anxiety about the potential near- and long-term ramifications for the cruise industry.
But ‘pricing and booking trends so far since the accident have been remarkably resilient across the industry,’ according to William Blair analyst Sharon Zackfia, in a note.
‘For Royal Caribbean, pricing trends have experienced a material year-over-year uptick over the past two weeks from trends in the fourth quarter and in early January. To a lesser extent, we have also seen pricing trends improve at Carnival in aggregate from December, inclusive of a very modest fall-off in pricing at Costa,’ Zackfia said.
William Blair cautioned investors that with only about two weeks since Costa Concordia’s grounding, ‘it remains too early to definitively state that the impact to the cruise industry is minimal.’
Royal Caribbean will report fourth quarter results on Feb. 2. In Q4 2010, EPS was 19 cents per share. William Blair’s 16-cent estimate reflects a 15% decrease. The current Wall Street consensus expectation is 15 cents per share.
Despite the uncertainty from Costa Concordia, Zackfia expects Royal Caribbean to issue initial 2012 constant currency net yield expectations of +2% to +3%, similar to its most recent guidance for full-year 2011 and in keeping with William Blair’s own +3% estimate.
However, Zackfia said it’s possible the company will widen its guidance to allow for impact from the Costa incident and ongoing uncertainty in the European market.
Bottom line: William Blair voiced optimism that Royal Caribbean’s EPS guidance will encompass the brokerage’s estimate of $2.89, up 5% from its 2011 estimate of $2.77. The consensus estimate for 2012 is $2.99.
William Blair rates both RCL and Carnival as ‘outperform.’